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Greed/Fear Ratio, Not P/Es, Drive Stock Prices

By  +Follow June 10, 2014 2:57AM
Tickers Mentioned:


    I sense some nervousness in the Street about the level of stock prices. I have been uneasy for a number of days, since I felt a major upward extension of the rally that started in April needed a robust rebound in the economy this spring, not just a good one.

    I see references to historic price/earnings ratios with conclusions based on current stock prices being above an average going back they don’t say how far. Averages can be worthless, or distorted at best, it all depends on the years covered and the events that impacted them. This is the kind of stuff  money managers feed computers who make their decisions for them.

    At extremes, P/Es signal opportunity to buy or sell, but their enormous range between high and low over the years reduces the credibility of an average significantly.

    The level of P/Es is a product of human emotions, greed and fear. While stock prices have soared over the last five years, I believe the greed/fear ratio is somewhere in the middle of extreme high and low.

    This market is not yet generating the overwhelming compulsion to buy stocks and especially to buy ridiculously over-priced stocks.  Actually, the extremes of the Greed/Fear ratio is not so much quantifiable as it is a matter of opinion, a well-seasoned sense of investors’ behavior.

    While some see P/Es  as high now, I don’t see the Greed/Fear ratio as high.

    Corrections – YES.   Bear market – NO.


    Odds favor a small correction at the open can reverse with a healthy gain for the day.

Support today is DJIA 16,876; S&P 500: 1,943; Nasdaq Comp.: 4,316

Resistance today is still  DJIA: 17,015; S&P 500: 1,959; Nasdaq Comp.: 4,341.

Investor’s first readDaily edge before the open

DJIA:  16,943

S&P 500:  1,951

Nasdaq  Comp.: 4,336

Russell 2000:    1,175

Tuesday,  June  10, 2014      9:15 a.m.


    The European Central Bank’s cut of its benchmark interest rate and announcement to employ additional measures to stimulate European economies stands to help the U.S. economy, as well. It did little to boost stock markets abroad which are trading at six-year highs, suggesting the move was already discounted. Even so, let’s consider it a  positive.



    At key junctures, I technically analyze each of the 30 Dow industrials seeking a reasonable near-term support and short-term resistance level. By technically studying the balances of buying and selling in each stock, then converting that data back to the DJIA using the “divisor” (0.1557159) I can get a better reading on the average itself.  The DJIA is a price-weighted average and subject to distortion by higher priced issues.

    As of June 9, the support for this  calculation is 16,801 and resistance is 17,176.

Note: My daily support/resistance levels are more short-term oriented.


HOUSING: Objective accomplished – will discontinue coverage

     I began to track the following housing stocks earlier this year, hoping to gain some insight into the strength of the economic recovery emerging from a severe winter.

    My reasoning was that a robust economic recovery cannot develop without a contribution from the housing sector.

    While the industry stats for housing lagged, the stocks rebounded in late May and to-date in June.

    Monday, PHM, KBH and DHI extended breakouts from consolidation patterns, TOL broke out of one, and BZH demonstrated strength within a consolidation pattern.          


Beazer Homes  (BZH)    $19.27

PulteCorp ($PHM) :  $20.23

Toll Brothers (TOL) :  $37.27

KB Homes  (KBH) : : $17.29

DR Horton  (DHI) : $24.61



      For detailed analysis of both the U.S. and Foreign economies along with charts, go to www.mam.econoday.com. Also included is an explanation of each indicator. If you want to know when the next Employment report or any other key report will be released that info is also there under “event release date.”


NFIB Small Bus. Optimism Ix. (7:30): May index up to 96.6 from 95.2

ICSC Goldman Store Sales (7:45) Sales down 2.8 pct. in June 7 week from a gain of 2.9 pct. the prior week.  Year/year  now +3.0 pct. vs +3.1 pct.

JOLTS (10:00) Job Openings/Labor Turnover


MBA Purchase Apps (7:00)

Treasury Budget (2:00)


Jobless Claims (8:30)

Retail Sales (8:30)

Bus. Inventories (10:00)




June 2    DJIA   16,717 Decision Time for Stocks ?

June 3    DJIA   16,743 Economy “Must” Accelerate,  or…

June 4    DJIA   16,722 Correction in Stocks Without Robust Economic Rebound

June 5    DJIA   16,737 Bulls Must Pick It Up, or Lose the Ball

June 6    DJIA   16,836 Easy Does It ! Dow 20,000, But Not in Straight Line

June 9    DJIA   16,924 Stock Market Breakout – Now What ?

A Game-On Analysis,  LLC publication

George  Brooks

“Investor’s first read – a daily edge before the open”

This email address is being protected from spambots. You need JavaScript enabled to view it.

Investor’s first read, is a Game-On Analysis,LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized investment advice or as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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Results for BZH
Bail O'Nomics
27 Feb 15 04:00:25
Low Rates Are Bad for Real Estate and Jobs $Z $TRLA $MOVE $BAC $JPM $TOL $BZH $KBH$HOV $LEN $DHI $WFC http://t.co/QzvShLfYHg
Breaking News
27 Feb 15 00:46:03
$BZH: Analyst Rating Update on Beazer Homes USA, Inc.: http://t.co/R5tdNaGdoL
James P Worthy
26 Feb 15 14:04:57
$BZH Beazer Homes USA Downgraded by Compass Point (BZH) http://t.co/aYPezIKHtH
Market Int Center
26 Feb 15 11:40:01
Beazer Homes USA $BZH Showing Resistance Near $17.64 ( http://t.co/1YrV49tjwh )
Daily Contracts
26 Feb 15 08:57:02
Real-Time feed of company contracts, original agreements and executive updates from $BZH http://t.co/LKQMm4wsRZ
James P Worthy
25 Feb 15 12:01:07
$BZH Beazer Homes USA Downgraded by Compass Point to Neutral (BZH) http://t.co/u7X6QpcU7m
25 Feb 15 08:03:05
$BZH: Beazer Homes USA Downgraded by Compass Point (BZH): http://t.co/HkPWrI6NpR
Breaking News Now
25 Feb 15 08:02:10
$BZH: Beazer Homes USA Downgraded by Compass Point (BZH): http://t.co/qRbrPKtB4P
25 Feb 15 06:11:03
$LEG $BZH $MTH $SODA: Household Durables Equities Technical Analysis -- Tempur Sealy ...: http://t.co/3vTJYg3hIY
25 Feb 15 04:11:06
$BZH: Price Target Update on Beazer Homes USA, Inc.: http://t.co/zK8FH0VsIj
24 Feb 15 17:42:08
$BZH: Zacks Long Term Rating Update on Beazer Homes USA, Inc.: http://t.co/GrPuHMF4IH
24 Feb 15 17:41:16
$BZH: Zacks Long Term Rating Update on Beazer Homes USA, Inc.: http://t.co/kZlKkafpuv
24 Feb 15 16:47:02
steels $X $AKS homies $BZH $KBH $HOV
Thomas Collins
24 Feb 15 14:31:11
$BZH Beazer Homes USA Downgraded by Compass Point to Neutral (BZH) http://t.co/7cQtigj24l
24 Feb 15 12:04:47
$TOL $RYL $PHM $BZH $HOV all responding nicely. Bears forbid a come back in US housing raising those indexes.
Market Int Center
24 Feb 15 09:03:13
Beazer Homes USA $BZH Showing Support Near $16.10 ( http://t.co/3VwPccZcZQ )
Matt Hughes
24 Feb 15 07:48:11
$TOL posted great numbers. Added to my $KBH and $BZH call positions. Home builders in 2015. Winning slowly, then all at once.
Chet Malhotra
24 Feb 15 06:32:27
@gorillapanic99 I don't like housing just think $KBH, $BZH & $HOV etc all dn 45-50% from 2013 peaks - most damage on short side done 4 now.
Sleek Money
24 Feb 15 05:35:25
Beazer Homes USA Rating Lowered to Neutral at Compass Point $BZH http://t.co/Ry5U3b04Kk
24 Feb 15 02:10:03
$BZH: Beazer Homes USA, Inc. (NYSE:BZH) Update: Beazer Homes ...: http://t.co/EtecHf1yJ2
24 Feb 15 02:09:05
$BZH: Beazer Homes USA, Inc. (NYSE:BZH) Update: Beazer Homes ...: http://t.co/ztlLJOSYub
24 Feb 15 02:07:08
$BZH: Beazer Homes USA, Inc. (NYSE:BZH) Update: Beazer Homes ...: http://t.co/oL6quGxViF
24 Feb 15 01:11:03
$BZH: Compass Point Rating Update on Beazer Homes USA, Inc.: http://t.co/3yua2UlksB
Penny Stock Secret
23 Feb 15 21:49:42
This Guy Turned $100 Into Over $10,000 In Just 30 Days!!! http://t.co/NovWYe2RAx .. $BYM $BZH $BZT
23 Feb 15 10:41:04
$BZH: Beazer Homes USA Lowered to "Neutral" at Compass Point (BZH): http://t.co/cgXwPpkiL0
23 Feb 15 10:03:20
$GOOG(543.70), $KIRK(24.41), $NEWT(14.55), $ROCK(16), $TRST(6.62) Shorts- $SCTY(56.18), $BZH(17.25), $EOG(94.25)...#greydogideas
Bill Stoller
23 Feb 15 09:33:10
Beazer Homes USA downgraded by Compass Point to neutral. http://t.co/N9P1tgHUHp $BZH #BZH via @RatingsNetwork
23 Feb 15 08:01:21
$BZH - Homebuilders lower after soft sales report, downgrades http://t.co/euQ2ovDmz9
Dividend Master
23 Feb 15 07:57:18
Homebuilders ‘Hope Trade’ to End; $BZH, $SPF, $RYL Cut: Compass Pt
Media Sentiment
23 Feb 15 07:54:36
$BZH received a new alert. Find out why at http://t.co/nZwqReM0tj #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 209
Stocks On The Move
23 Feb 15 07:51:37
Homebuilders lower after soft sales report, downgrades http://t.co/0YhB8vBxzG $SPF $BZH $ITB $XHB
SA Breaking News
23 Feb 15 07:51:37
Homebuilders lower after soft sales report, downgrades http://t.co/mCz8bFL0m9 $SPF $BZH $ITB $XHB
US Banking News
23 Feb 15 07:00:12
Beazer Homes USA Downgraded by Compass Point to Neutral $BZH http://t.co/JVIg9aQeCW
The Fly
23 Feb 15 06:59:39
On The Fly: Analyst Downgrade Summary $ANFGY $ACI $BHP $BZH $BA $CCS $CYBR $DTV $ERF $FISV $GPX $IBKR $MRC $PC... http://t.co/I41uEfYUZO
Media Sentiment
23 Feb 15 06:34:59
$BZH received a new alert. Find out why at http://t.co/nZwqReM0tj #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 161
US Consumer News
23 Feb 15 06:31:22
Beazer Homes USA downgraded by Compass Point to neutral. http://t.co/pY79SHI10u $BZH #BZH
Analyst Ratings
23 Feb 15 06:31:17
Beazer Homes USA downgraded by Compass Point to neutral. http://t.co/CXoJbn6047 $BZH #BZH
23 Feb 15 01:06:02
$BZH: Company Shares of Beazer Homes USA, Inc. Drops by -0.41%: http://t.co/invxMHUa7O
By  +Follow June 10, 2014 2:57AM



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