Data psychological
The VIX (fear index calculated on the S & P'500 and has an inverse trend compared to the benchmark) closed the week at 12.59 with a slight increase compared to one week ago (closing 11.92). Once again, the 50 day moving average.'s feeble attempt to stem the increase in the risk perceived by investors to the market (the rise of fear) caused by the change in the macroeconomic environment with the consequential relocation of portfolios according to the deceleration of the economy. The maximum weekly Vix index was 13.28. For the next week, we expect an increase in the Vix volatility index, with a consequential fall in the S & P'500. We Debitower Capital on the S & p'500 we ask to neutral-bearish in the short term (since we are in an overbought situation) and bullish in the short and medium term. Assume substantial increases in volatility only in the second half of 2007 or for short periods by then.
VXN index (the index of fear, calculated on the Nasdaq) closed the week at a height of 18.23 from 17.79, also in this case, the considerations made earlier.
Key Statistics: The P / E average of the prospective S & P'500 have been updated in the last week.
"The analysts, in light of quarterly releases have lowered the prospects for earnings growth for 2007. In particular, while for the whole of 2006 we expect overall earnings growth of 16.5% for the 2007 growth expectations are reduced to a paltry 2.5%. By analyzing for each quarter we realize that the critical period required by the analysis should be the second half of 2007, where the risk recession suffered a 30-35% chance of occurring, especially in light of the unique configuration of the yield curve and Americans in particular we refer to the spread negative that exists between the yield on the ten-year and three months. Analysts serving a decline in earnings in the second half of 2007 by 3.5%. Mini recession or sharp slowdown, however, surely due to too much growth the previous year, rather than inherent weaknesses in the strongest economy in the world. Despite these predictions over the next three quarters will continue to benefit from gains in strength.
analyze ip / e expected the 2006 and 2007 according to the forecast model Debitower Capital. We are still far from the historical average since 1988 (for more details click here) the equilibrium level is increasingly moving towards the historical average from 1935 to today that is much lower because of rising interest rates and a instability of economic growth, as evidenced by the inversion of the yield curve. Our short-term targets (by end of year), moved to 1519 (compared to the study of 12 June 1360), about, that is 18.73 p / e average calculated on the results of the prospective quarter of 2006 (currently we to 17.67), every time "at the end of this quarter. For some ' time we introduced another method of valuation which takes into account market expectations and therefore does not rely only on finding the fundamental objective value, but depends on a set of subjective data. The target end of the year 1433 becomes so calculated taking into account the difference in p / e expected between now and the final period (16,23). . If we were to strictly follow the assessments of the model p / e could be expected to say that our fork is the 1433-1519 annual target area is quite wide. The market, which is expected to grow between now and end of the year between 9% and 15%. We also expect an acceleration in the bullish first quarter of 2007. In fact, the market may move, in due proportion, as it did between the end of 1999 and 2000 with a sharp rise and then a steep downhill. Our position, however, for now is very bullish and encourage you to evaluate the return on the market.
analysis COT weekly on the S & P'500 undergoes changes.
At this stage we have a strong dichotomy between the behavior of large traders (large investors) and arbitrageurs (commercial hedgers), as well as the small traders. Large investors are buying with both hands, arbitrageurs position themselves as sellers, small investors believe the end of the rise in selling. The difference in behavior is the classic example of temporal asymmetry and information that exists on the market. Large investors are buying, because they know that the rise in earnings season is not over yet and in any case the trade-offs between stocks and bonds is still favorable to the former, or as arbitrageurs close their positions (open interest has declined dramatically ) or are positioned downward since their target time exceeds six months and provide a drop exceeded the party, given that anticipate the directions of market imperfections and analyze the deviations. Small investors could be wrong as usual, but they are bombarded with news that provide disaster given the economic slowdown and rising interest rates, do not know that beauty is right now. The raw materials are falling, and then provides an economic slowdown worldwide. This is the phrase that most of all turn to investors and that there is substantial agreement. The problem is that you never hear the answer to the question that springs immediately to mind: "When this will have an impact on equity markets and with what effects? The answer lies in the delay that exists between macroeconomic performance, resulting in the behavior of market participants (consumers, business-state)-the dynamics of corporate profits-publication of news or launching of any profit warning. Between the fall of raw materials and the fall in equity markets may also pass More than a year without arousing any concern among operators. It 'good to know. We are bullish in the short and medium term.
