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

By  +Follow June 10, 2014 2:57AM
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SUMMARY:

    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.

TODAY:  

    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.

EUROPE:

    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.

 

TECHNICAL ANALYSIS of 30 DOW JONES INDUSTRIALS

    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.          

    PARTIAL LIST :

Beazer Homes  (BZH)    $19.27

PulteCorp ($PHM) :  $20.23

Toll Brothers (TOL) :  $37.27

KB Homes  (KBH) : : $17.29

DR Horton  (DHI) : $24.61

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

THIS WEEK’s ECONOMIC REPORTS:

      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.”

TUESDAY:

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

WEDNESDAY:

MBA Purchase Apps (7:00)

Treasury Budget (2:00)

THURSDAY:

Jobless Claims (8:30)

Retail Sales (8:30)

Bus. Inventories (10:00)

FRIDAY:

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

RECENT POSTS:

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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for BZH
Daily Contracts
29 Jul 15 07:11:02
Real-Time feed of company contracts, original agreements and executive updates from $BZH http://t.co/LKQMm4O4gz
Media Sentiment
29 Jul 15 05:44:52
$BZH received a new alert. Find out why at http://t.co/nZwqReM0tj #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 234
Market Int Center
29 Jul 15 05:42:33
Beazer Homes USA $BZH Showing Bearish Technicals ( http://t.co/YMzUnzOJVf )
Irma Doucet
29 Jul 15 05:34:03
$BZH Beazer Homes USA, Inc. (NYSE:BZH) Short Interest Update http://t.co/Wybi72Z8CV
Thomas Collins
29 Jul 15 05:08:22
$BZH Beazer Homes USA, Inc. (NYSE:BZH) Short Interest Update http://t.co/hVnpVpw2CL
dailystockplays.com
28 Jul 15 15:02:40
Ichimoku Green http://t.co/bhXN4dp7eX $UNG $LMCK $KBH $LULU $BBVA $ARCC $IVR $WHR $HDB $SAH $YANG $BZH $CMLS $CTT $WRE $POST $FXP $CBPX
InvestWithConf
28 Jul 15 14:37:02
$BZH is rated BUY, 13.1% upside by Wall Street analysts based on average ratings/targets http://t.co/NVNHXgUyEJ http://t.co/fNJIvFQydD
DailyStockPicks
28 Jul 15 07:18:45
$OCLS cheap health care stock. Price target of $5. 200%+ upside $PLD $TQNT $MAC $BZH $ERF $SCS investors read http://t.co/rWpJvFEbwZ
Chet Malhotra
28 Jul 15 07:06:20
@GrantDossetto @thirdgenwidget @DividendMaster $BZH also positioned poorly.
Chet Malhotra
28 Jul 15 06:55:24
@GrantDossetto @thirdgenwidget @DividendMaster $DHI better shape than $KBH, $BZH & $HOV..Still margins price/mix issue 4 all. Jobs next shoe
Market Int Center
28 Jul 15 06:23:06
Beazer Homes USA $BZH Trading Near $17.75 Support Level ( http://t.co/gsClysCfrn )
Grant Dossetto
28 Jul 15 06:17:38
@chet1970 @thirdgenwidget @DividendMaster If I had to buy a builder it and $LEN would be my choices. As prices drop, $BZH and $KBH scare me
Penny Stock Secret
27 Jul 15 21:39:18
$71,000 in ONE TRADE!! By Follwing Their Signals More Info Here http://t.co/SVqoMkrw2z .. $BYM $BZH $BZT
TimeForGrowth
27 Jul 15 19:07:02
$BZH: Wall Street analysts bullish on BZH's earnings growth: http://t.co/m5egeSwGaO http://t.co/jYZq9uolFk
Jeffrey Blake
27 Jul 15 14:03:49
$BZH Beazer Homes USA, Inc. to Webcast Its Third Quarter Fiscal 2015 Financial ... http://t.co/qlpAhZmIL4
Jack Trader
27 Jul 15 13:06:46
$BZH Beazer Homes USA, Inc. to Webcast Its Third Quarter Fiscal 2015 Financial ... http://t.co/OSvCzp5rmA
John Ablemann
27 Jul 15 06:32:05
$BZH Beazer Homes USA, Inc. to Webcast Its Third Quarter Fiscal 2015 Financial ... http://t.co/bQgot8SYP7
InvestWithConf
24 Jul 15 16:15:02
$BZH is rated BUY, 14.0% upside by Wall Street analysts based on average ratings/targets http://t.co/NVNHXgUyEJ http://t.co/pMkmdv10fo
John Ablemann
24 Jul 15 15:14:04
$BZH Beazer Homes USA, Inc. to Webcast Its Third Quarter Fiscal 2015 Financial ... http://t.co/OJPm7UQJdT
$Stocknewsalerts
24 Jul 15 12:47:37
$BZH ALERT: New Beazer Homes USA Inc. SEC Filing From our Stock News Alerts App
ProTradersNews
24 Jul 15 12:40:02
$BZH: New SEC Filing for BZH: Form 25-NSE (No. 0000876661-15-000328): http://t.co/k5PnsITdX6
Latest SEC Filings
24 Jul 15 12:39:06
NEW SEC Filing for $BZH filed a moment ago: http://t.co/ShbR0LDlwK http://t.co/10ZjcJ1wkK
Market Int Center
24 Jul 15 12:14:28
Beazer Homes USA $BZH Showing Neutral Technicals With Resistance At $19.73 ( http://t.co/UhKoaq0Yt2 )
MarketBeatCom
24 Jul 15 12:08:26
Get the latest ratings for $BZH $MMR $RDA $NUE $VTTI in your inbox with MarketBeat Daily http://t.co/nSJuDsYidj
Market Int Center
23 Jul 15 12:17:33
Beazer Homes USA $BZH Trading Near $19.75 Resistance Level ( http://t.co/gX2fDqoRVh )
Market Int Center
21 Jul 15 09:39:33
Beazer Homes USA $BZH Trading Near $18.33 Support Level ( http://t.co/VJwIwMumgY )
Media Sentiment
21 Jul 15 07:20:55
$BZH received a new alert. Find out why at http://t.co/nZwqReM0tj #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 242
BNK Invest
21 Jul 15 07:18:13
Insiders Buy the Holdings of $RORO ETF $RAS $BZH #etfs http://t.co/34LDlTiExu
ETFChannel
21 Jul 15 07:18:08
Insiders Buy the Holdings of $RORO ETF $RAS $BZH #etfs: A look at the weighted underlying holdings of the SPDR... http://t.co/dlFIWKcF5X
				
				
By  +Follow June 10, 2014 2:57AM
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