Originally published in the Stocks BullBear Weekly Report released on 2/18/2015. Partial excerpt only. Written by @AKWAnalytics.
While our call for range bound stock markets did not come to fruition, at least our indication that a breakout would most likely be higher was correct. At this time we are steadfastly neutral given the technical picture, however we still see upside before a serious correction.
You would think that with stocks at all time highs in Europe and the US that the economic data must be at least improving, if not getting pretty good, to support such lofty valuations (which according to the Schiller P/E and Buffet P/E are way overvalued historically). This is far from the case as the data in the US continues to disappoint those that are expecting “liftoff”, and Europe is still mired in a recession and currency crisis despite minor expectation beats in the data.
Now, we cannot say that this is a new phenomenon given that this has been going on for about five years, but it is getting to the point where investors will begin to question the data and those reporting it, which is when the volatility could really pick up. It doesnt seem like we are there yet, though, as the market action remains bullish in the face of these headwinds.
For these reasons, plus those provided by the charts, we are staying on the sidelines for now with regards to stocks, at least until we get a buyable dip that cleans up the indicators and reinvigorates bullish volume. Stay patient and keep dry powder ready…
Cheers,
@AKWAnalytics
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