ETF Range Projections & A Quote to Start the Day

All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.

- Martin Luther King, Jr.

For more detailed economic data click “Today’s Calendar” in the navigation bar to the left.  

Overseas markets have a downward bias this morning as we await the GDP report: Nikkei 225 -1.78%, Hang Seng -0.49%, Shanghai -0.48%, DAX -0.28% and the FTSE 100 -0.46%

At about 7:30AM ET, ahead of the GDP and other reports the futures are pointing to a lower open: Dow -51, S&P -7, NAZ =6, Oil -$0.46 and Gold -$0.80

Trade Safe  and

Have a great day !

On a Value Basis – Are Stocks Cheap?

The simplest and most widely used ratio used to predict the market is the price–earnings ratio. The use of one-year’s earnings in the price–earnings ratio is an unfortunate convention, recommended by tradition and convenience rather than any logic. As long ago as 1934, Benjamin Graham and David Dodd, in their now famous textbook Security Analysis, said that for purposes of examining such ratios, one should use an average of earnings of “not less than five years, preferably seven or ten years.” Earnings in any one year tend to be affected by short-run considerations, that cannot be expected to continue. We extend our moving average even further than Graham and Dodd did, on the supposition that even more smoothing is advantageous Dr. Robert J. Shiller

Data from Dr. Shiller‘s web site; The following graph back to 1871 showing S&P-500 (Blue) and the price earnings ratio figured on the previous 10 year earnings (Red).  I’ve outlined for your convenience some previous high and low points that provided outstanding long term buy/sell indications.

Based on the above charts stocks are not cheap.  At just under 20 the chart suggests we are not far from previous high points in 1929 and 1966, and still a good distance from great long term buy opportunities.