End of the Beginning or Beginning of the End?

The S&P 500 and the NASDAQ have been on a run.  They have made new all-time highs.  People are energetically discussing the notion we are at a top.  Maybe Yes, Maybe No.  Just as “cheap” doesn’t define a bottom, “expensive” doesn’t define a top (just ask short sellers about the late 90’s when the market was expensive for years!) Charts below are meant to add to the debate.  Whether we are at an “end of the beginning” or “beginning of the end” is above my pay grade. We measure upside and downside one stock at a time. We are respectful of serious analysis.     Jeb B Terry, Sr. May 2, 2017 

The S&P 500 is ready to retest its high. Maybe a “sell in May” correction stalls the rise in the short term. The trend is up.
While the following chart seems extreme I find it very interesting.  It took 6,256 days for NASDAQ to go from 5,000+ to 6,000+. Before you get too scared by the apparent steepness remember to consider a log scale.  The percentage increase is less per 1,000 point move.  Also remember that the leaders of the NASDAQ today are terrifically profitable and still growing.

Charts courtesy of Bespoke Investment Group.

Aberdeen Investment Management – a guide service for micro-cap technology investment –Manager of NexTech Medical Investments

Seeing the best earnings and revenue “beat” rates since 2010

The S&P 500 earnings season is progressing and the biggest companies have reported.  The earnings “beat” at 68% is the best since 2010.  It compares very strongly to beat rates in the low 60’s/high 50’s since that time. The revenue beat rate at 66% is an even greater improvement over the beat rates since 2010.       Jeb B Terry, Sr. May 2, 2017 

Charts courtesy of Bespoke Investment Group.

Aberdeen Investment Management – a guide service for micro-cap technology investment –Manager of NexTech Medical Investments

US Equity Mutual funds – first inflows in over a year!

The U.S. retail equity mutual fund investor may be starting to come back!  The latest report shows inflows to equity mutual funds for the first time since July 2015.  It is no coincidence that the long period of outflows were accompanied by a bear market in micro-cap technology stocks. It is also no coincidence that micro-cap tech stocks have only now started to see strength based on the same rising sentiment that supports inflows to equity mutual funds. Liz Ann Sonders of Schwab tweeted the underlying chart today.   Jeb B Terry, Sr. Dec. 19, 2016 
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Aberdeen Investment Management – a guide service for micro-cap technology investment –Manager of NexTech Medical Investments

Small Businesses and consumers are undeniably feeling bullish

The Trump election has accelerated already rising optimism in two key measures for the domestic economy – small business optimism and consumers outlook for financial condition – each are predicates for business investment, hiring and consumer spending on durable goods.  They also are good indicators for the health of the micro-cap sector of the stock market.   Jeb B Terry, Sr. Dec. 19, 2016 
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U. of Michigan Consumer Confidence – Outlook for financial situation a year from now is best 2005!

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Aberdeen Investment Management – a guide service for micro-cap technology investment –Manager of NexTech Medical Investments

Active managers are going “all-in”

Active equity money managers are bullish on prospects of Trump economy and they are putting their clients money to work.  The managers are in fact over 100% invested – typically a sign of more upside as they are still coming out of a period of being underweighted in 2015 and this year.  The money tends to go first to the mega caps then to the merely larges caps then to Mid-caps etc.  2017 should see an increase in allocation of funds to micro-cap growth stocks once tax loss selling is over and that would make for a very Happy New Year!   Jeb B Terry, Sr. Dec. 19, 2016 
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Aberdeen Investment Management – a guide service for micro-cap technology investment –Manager of NexTech Medical Investments

 

S&P 500 earnings are estimated to have a strong recovery going into 2017 – P/E may not be excessive

S&P 500 earnings are expected to show strong recovery in 4Q16 and 2017.  YoY earnings growth is estimated to be up !14% in 3Q just finished and up ~35% in 4Q over 2015.  Current 2017 earnings are estimated to be up nearly 20% over 2016.  82% of the S&P 500 companies have that reported so far have beaten estimates – its a small sample so far but encouraging.  The forward looking charts show a sharp recovery in earnings going out to year end 2017.  The market has lifted sharply in the past when the earnings growth shows such a recovery.   Jeb B Terry, Sr. Oct. 17, 2016


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Aberdeen Investment Management – a guide service for micro-cap technology investment – Manager of NexTech Medical Investments