Showing posts with label Ned Davis Research. Show all posts
Showing posts with label Ned Davis Research. Show all posts

Monday, November 20, 2023

S&P 500 Projection Into June 2024 | Allen Reminick

 
 
The November rally is likely to experience some downside pressure in the first half of December and the first half of January. 
After that, we expect higher prices until March and April of next year.

 

Saturday, July 8, 2017

Equities Expensive and Commodities Cheap?

Incrementum AG (Jun 1, 2017) - In a historical context, the relative valuation of commodities to equities seems extremely low. In relation to the S&P500, the Goldman Sachs Commodity Index (GSCI) is currently trading at the lowest level in 50 years. 


The chart outlines the valuation of the GSCI relative to the S&P500. The GSCI comprises 24 commodities from all commodity sectors and serves as a benchmark for investment in the commodity markets and as a measure of commodity performance over time. If the ratio is low (green circles), it means that commodities are cheap relative to shares. If the ratio is at a high level (red circles), like during the Gulf Crisis in 1990, the prices of raw materials are relatively expensive.

The current ratio is 0.87 while the median is at 4.1. A return to the median gives 371% potential, but in most cases a rally doesn't stop at the median. In absolute terms, the scene seems set for a new bull market for commodities. According to Ned Davis Research, commodities gained 217% on average over the period of a bull market. 


Tuesday, January 31, 2017

Stock Market Capitalization as a Percentage of GDI | 1925 - 2016


Total market capitalization (TMC) of the stock market as a percent of Gross Domestic Income (GDI) is 126%, the second highest in 100 years, only exceeded by 164% just prior to the 2000 tech bubble. This highlights the extreme extent of stock market distortion, which can largely be attributed to artificially low interest rates. Because stocks are an unusually large percentage of the economy, a stock market correction would undoubtedly stunt economic growth. Because the market is so high relative to GDI, corrections will have a greater negative impact on the economy. Furthermore, this ratio's lofty level illustrates just how overbought the stock market is in general, signaling the potentially precarious state of the markets (Chart: Ned Davis Research).