Valuations matter in the long run. That’s important to remember. Especially at times like this when almost every valuation metric indicates the stock market is expensive.  There are many definitions of these terms, but, to me, valuation metrics are tools to normalize the relationship between stock prices and fundamentals. Popular metrics include the price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio. There are dozens of these indicators, and each has its advantages and disadvantages.  —Recommended Link— Create a 10%+ Income Stream for Life We’re sitting on a collection of the safest, most generous monthly payers available. And while $11,200 in… Read More

Valuations matter in the long run. That’s important to remember. Especially at times like this when almost every valuation metric indicates the stock market is expensive.  There are many definitions of these terms, but, to me, valuation metrics are tools to normalize the relationship between stock prices and fundamentals. Popular metrics include the price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio. There are dozens of these indicators, and each has its advantages and disadvantages.  —Recommended Link— Create a 10%+ Income Stream for Life We’re sitting on a collection of the safest, most generous monthly payers available. And while $11,200 in dividend checks is a welcome addition to anyone’s income, investors also love racking up capital gains as high as 446%. Start generating a 10%+ income stream for life today from these consistent companies. Normalizing is a way to make numbers comparable. For example, if we are talking about company earnings, we might find one company has $10 million in earnings and another has $100 million in earnings. By itself, this information really doesn’t tell investors anything about how the stock is valued.  To make earnings more comparable, companies often report earnings per share (EPS). Assuming the first company has 10… Read More

In older books about the stock market, there’s a pattern called a “coil.” Precise definitions differ, but the general idea is that the price action is acting like a spring being compressed. Eventually, the spring is released, and it makes a rapid move as it reverts to its full size.  In the market, the coil is a setup for a sharp price move. The chart below shows the recent price action with a volatility indicator at the bottom of the chart.  The indicator is the Income Trader Volatility (ITV) indicator I developed to help me identify the best times to… Read More

In older books about the stock market, there’s a pattern called a “coil.” Precise definitions differ, but the general idea is that the price action is acting like a spring being compressed. Eventually, the spring is released, and it makes a rapid move as it reverts to its full size.  In the market, the coil is a setup for a sharp price move. The chart below shows the recent price action with a volatility indicator at the bottom of the chart.  The indicator is the Income Trader Volatility (ITV) indicator I developed to help me identify the best times to trade options. It’s a pure measure of volatility that responds relatively quickly to the market action. Best of all, it solves the problem of the lag that is found in many popular volatility indicators.  —Recommended Link— 9 Game Changing Predictions for 2019 Want to know where the money will be in 2019? Discover over a dozen potentially life-changing recommendations inside our special new report, 9 Game-Changing Investment Predictions for 2019. Click here for the full details now. Currently, volatility is low, as it was in September. ​​ ITV tends to move from low to high values. Current readings are… Read More

Earnings season is winding down, and based on the data we’re seeing so far, investors have cause for concern. What is that, you ask? Because, as I told Income Trader readers earlier this week, I believe the data points to a change in the trend of fundamentals. Specifically, the data I find interesting is the relationship of actual reports to expectations.  Let me explain… —Recommended Link— The Stock Market Hack That Actually Works *(Effective on the NYSE, NASDAQ, CBOE, CHX, NYSE Arca, & TSX Stock Exchanges). “It pulled me out of the hole with a recovery of $30,000 in… Read More

Earnings season is winding down, and based on the data we’re seeing so far, investors have cause for concern. What is that, you ask? Because, as I told Income Trader readers earlier this week, I believe the data points to a change in the trend of fundamentals. Specifically, the data I find interesting is the relationship of actual reports to expectations.  Let me explain… —Recommended Link— The Stock Market Hack That Actually Works *(Effective on the NYSE, NASDAQ, CBOE, CHX, NYSE Arca, & TSX Stock Exchanges). “It pulled me out of the hole with a recovery of $30,000 in just a couple of months.” ​Read more here… Expectations Vs. Reality Over the past five years, on average, 71% of the companies in the S&P 500 beat analysts’ expectations for earnings per share (EPS). About 9% meet expectations, and about 20% miss expectations.  According to FactSet, 89% of the companies in the S&P 500 had reported earnings through last Friday (Feb. 22). There are a few interesting numbers to consider when looking at the group:  — 69% beat EPS estimates. This is below the one-year (77%) and five-year average (71%).  — EPS reports are 3.5% above expectations,… Read More

The S&P 500 remained above its 200-day moving average (MA) last week. The index is now up about 19% in the past eight weeks.  At Friday’s close, the index was at an important resistance level. That’s the dashed blue line in the chart below. I expect a quick move of at least 5% over the next few weeks. The question is whether the move will be up or down. —Recommended Link— Americans Are Ignoring This Proven Investing Method What’s proven to be safer than stocks and bonds, provides immediate payouts (of as much as $2,800… Read More

The S&P 500 remained above its 200-day moving average (MA) last week. The index is now up about 19% in the past eight weeks.  At Friday’s close, the index was at an important resistance level. That’s the dashed blue line in the chart below. I expect a quick move of at least 5% over the next few weeks. The question is whether the move will be up or down. —Recommended Link— Americans Are Ignoring This Proven Investing Method What’s proven to be safer than stocks and bonds, provides immediate payouts (of as much as $2,800 or more), and can be done every week? Come see the one thing that beats every income investment opportunity I’ve come across in 3 decades of research. This brief report has all the details. ​News should provide the catalyst for a price move. While we normally can’t predict when “news” will occur, we can safely assume there will be something about the approaching China trade war deadline.  On Sunday, CNBC noted…  U.S. and Chinese negotiators met for over seven hours on Saturday to resolve their trade dispute and avoid an escalation of the tit-for-tat tariffs that have… Read More

My young boys ask a lot of questions. I know this isn’t unique. Almost all young children ask questions. And after a while, almost all those questions become extremely repetitive and, in all honesty, annoying. But I’m sure I’m not the only parent who has faced a long stream of “why” questions, which is currently among the favorite questions of my little guys. I patiently answer their questions as many times as they ask because I have found myself in their situation at times. We all have. After all, “Why?” could be among the most important question we ask as… Read More

My young boys ask a lot of questions. I know this isn’t unique. Almost all young children ask questions. And after a while, almost all those questions become extremely repetitive and, in all honesty, annoying. But I’m sure I’m not the only parent who has faced a long stream of “why” questions, which is currently among the favorite questions of my little guys. I patiently answer their questions as many times as they ask because I have found myself in their situation at times. We all have. After all, “Why?” could be among the most important question we ask as investors. —Recommended Link— Your Chance To Learn From The Best Do you want to make up to $4,000 each week in the stock market in only about 10 minutes per week? Stock expert Jim Fink is holding a new LIVE, free training where he’ll reveal his 3 secrets behind his #1 investing strategy for 2019. Join him February 27th at 1:00 P.M. Eastern to learn how to make easy money each week selling stock insurance to nervous-Nelly investors. Spots are limited — Click here to register for free. This week, I want… Read More

There’s an old saying that trees don’t grow to the sky. In other words, there is a natural limit to growth. In the case of a tree, maybe the tree’s structure makes it impossible for nutrients to reach above a certain height. As with so many sayings, this one is often applied to the stock market. For example, companies cannot continue growing earnings at 100% per year forever. There is a natural limit to a company’s growth. The same is true for stock prices. I think of this old saying whenever I see a long streak of up or down… Read More

There’s an old saying that trees don’t grow to the sky. In other words, there is a natural limit to growth. In the case of a tree, maybe the tree’s structure makes it impossible for nutrients to reach above a certain height. As with so many sayings, this one is often applied to the stock market. For example, companies cannot continue growing earnings at 100% per year forever. There is a natural limit to a company’s growth. The same is true for stock prices. I think of this old saying whenever I see a long streak of up or down closes. In the chart below, you can see that the S&P 500 has closed higher for eight weeks in a row.  This is not unprecedented. There have been 30 previous instances when a streak lasted at least eight weeks. The longest winning streak on record is only 12 weeks.  So, we know the current streak will end. But what does history tell us about this scenario? When is it likely to end? And what happens after that? To help answer that question, I ran some tests to see what’s happened in the past. The results are summarized in the table… Read More

For the fourth time since this market selloff began in October, the S&P 500 has successfully broken above its 200-day moving average (MA).  If you’ve been following along with my recent commentary, then you know I’ve weighed in on this simple indicator several times in the past few weeks, due to its psychological significance. The first three crosses (all during the last few months of 2018) are marked by arrows in the chart below. Each breakthrough was short lived, and selling pressure quickly pushed prices back below the MA. Which brings me to this week’s question: Will Friday’s breakthrough be… Read More

For the fourth time since this market selloff began in October, the S&P 500 has successfully broken above its 200-day moving average (MA).  If you’ve been following along with my recent commentary, then you know I’ve weighed in on this simple indicator several times in the past few weeks, due to its psychological significance. The first three crosses (all during the last few months of 2018) are marked by arrows in the chart below. Each breakthrough was short lived, and selling pressure quickly pushed prices back below the MA. Which brings me to this week’s question: Will Friday’s breakthrough be any different?  —Recommended Link— 9 Game-Changing Predictions for 2019 Want to know where the money will be in 2019? Discover over a dozen potentially life-changing recommendations inside our special new report, 9 Game-Changing Investment Predictions for 2019. Click here for the full details now. ​To answer that question, we need to consider how the rally compares to the overall decline. The decline, which lasted 65 trading days, was sharp. The S&P 500 fell 20.2% from its intraday high on September 21 to its intraday low on the day after Christmas.  Through Friday, this most recent recovery has lasted 35 trading… Read More

Lately, I’ve been noting the importance of the 200-day moving average (MA). The first chart I want to look at this week shows that the S&P 500 failed to break above that MA.  I’ve also highlighted another section of the chart that is a good illustration of how important the 200-day MA can be. During that period, the index reached its top in October and began selling off. The initial declined when the price broke below the 200-day MA.  For almost eight weeks, the S&P 500 remained within a few percentage points of this level. Then, in early December, the… Read More

Lately, I’ve been noting the importance of the 200-day moving average (MA). The first chart I want to look at this week shows that the S&P 500 failed to break above that MA.  I’ve also highlighted another section of the chart that is a good illustration of how important the 200-day MA can be. During that period, the index reached its top in October and began selling off. The initial declined when the price broke below the 200-day MA.  For almost eight weeks, the S&P 500 remained within a few percentage points of this level. Then, in early December, the index broke sharply below its moving average, sparking a 15% tumble that reached a low of 2,351 on December 24.  In the six weeks since those lows, the S&P 500 staged a steady rally back toward its 200-day MA (spurring an increase of bullish opinions)… but it stalled out last week after failing to break through the MA for two days.  —Recommended Link— Thousands Of Americans Have Joined A Revolutionary New Marijuana Profit-Sharing Plan. Their payouts have been breathtaking. The company behind this plan sends out profit-sharing checks like clockwork, and you could quickly find… Read More

We’re barely a month into 2019, but the 2020 election season is already in full swing.  Personally, I don’t have any opinion on the candidates who have thrown their hat into the ring (other than that I’m not sure we need politicians running for president almost two years before the election, but that seems to be the current system).  Over the next two years, many political commentaries will focus on whether we can afford the programs candidates propose. Some will argue that deficits are already too high and adding trillions in spending will push them even higher.  Once upon a… Read More

We’re barely a month into 2019, but the 2020 election season is already in full swing.  Personally, I don’t have any opinion on the candidates who have thrown their hat into the ring (other than that I’m not sure we need politicians running for president almost two years before the election, but that seems to be the current system).  Over the next two years, many political commentaries will focus on whether we can afford the programs candidates propose. Some will argue that deficits are already too high and adding trillions in spending will push them even higher.  Once upon a time, governments were expected to balance their budgets, but then economist John Maynard Keynes realized that governments could stimulate growth by running deficits when the economy contracted. Keynes also suggested running a surplus to offset the deficits when the economy was expanding, but politicians seem to have forgotten about that part of his work. If they followed that advice, deficits would rise and fall, and, in the long run, the government’s budget would be balanced (in theory).  That theory illustrates the concept of mean reversion, where a value fluctuates above and below its average. Mean reversion has also been applied… Read More

I saw an interesting chart recently that I believe summarizes the current state of the stock market.  Essentially, it shows that U.S. stocks are extremely overvalued compared to the rest of the world.  Why does this matter? And, more importantly, how can we profit? Now, those are the key questions… But first, let’s use what we know as investors to unpack the information.  The chart below shows the cyclically adjusted price-to-earnings (CAPE) ratio for both U.S. and global stocks. It was developed by Nobel Prize-winning economist Dr. Robert Schiller.  —Recommended Link— “It’s like getting 26 paychecks advanced to you in… Read More

I saw an interesting chart recently that I believe summarizes the current state of the stock market.  Essentially, it shows that U.S. stocks are extremely overvalued compared to the rest of the world.  Why does this matter? And, more importantly, how can we profit? Now, those are the key questions… But first, let’s use what we know as investors to unpack the information.  The chart below shows the cyclically adjusted price-to-earnings (CAPE) ratio for both U.S. and global stocks. It was developed by Nobel Prize-winning economist Dr. Robert Schiller.  —Recommended Link— “It’s like getting 26 paychecks advanced to you in ONE LUMP SUM!” Executive Dividends are one of Wall Street’s best-kept secrets, paying out a small fortune in unannounced cash seemingly at random — and today, Nathan Slaughter shows you where to find them. Read more here. ​Source: Global Financial Data via MebFaber.com  Cyclical, in this case, means the indicator measures over 10 years, the amount of time Schiller believes covers an economic cycle. Ben Graham, the father of fundamental analysis (and Warren Buffett’s business school professor), explained the importance of accounting for the economic cycle when calculating earnings. Graham suggested averaging earnings over eight years to account for… Read More