This week Standard and Poors conducted their quarterly market outlook webinar and it was packed with great analysis as always.
I always like listening to Mark Arbeter to see what he thinks of the current market.
A few key takeaways from the webinar:
– Europe and emerging markets have been under performing and could bounce back over the next 6-12 months result in outperformance
– Seasonally, May-Sept is weak and Nov-Apr is very strong
– Q3 earnings growth was sluggish but should pick up in Q4
– GDP is estimated to increase in 2013 for most regions with Europe having the biggest swing.
The key points from Arbeter were:
– Arbeter remains bullish BUT sees the potential for an 8-15% correction some time within the next 3-6 months.
– The S&P 500 is possibly forming a H&S top. If that occurs and the neckline is broken, it could result in a measured move to the 1530 area.
– There are a number of weakening weekly momentum indicators and also bearish divergence on 14 week and weekly MACD and 43 week RSI. The last time Arbeter saw similar indicators was late 2010 / early 2011 which lead the a nasty correction in mid 2011.
– The recent breakout to new all time highs is very bullish. Markets like to test breakout levels, so it’s likely that any correction will retrace to the breakout level.
– The 2009 low was likely a generational low, similar to the 1974 low.
– Small caps (RUT) are outperforming which is healthy from a longer term perspective.
– We currently have a very low Put/Call ratio which is cause for concern. When the Put/Call ratio is low it indicates there is a lot of call buying activity which can be a contrarian indicator.
– The Advance / Decline line looks good. This typically peaks months before a major decline such as in 1987, 2000 and 2007.
