Charles H. Dow, Father of Value Investing
It's All About the Dividends
Dow Theory: Buying in Scales
How to Avoid Losses
When Dividends are Canceled
Cyclical and Secular Markets
Inflation Proof Myth
What is Fair Value?
Issues with P-E Ratios
Beware of Gold Dividends
Gold Standard Myth
Lagging Gold Stocks?
No Sophisticated Investors
Dollar down, Gold up?
Problems with Market Share
Aim for Annualized Returns
Anatomy of Bear Market Trade
Don’t Use Stop Orders
How to Value Earnings
Low Yields, Big Gains
Set Limits, Gain More
Inside a Moneymaking Machine Like No Other
The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies
Berkshire Hathaway Shareholder Letters
Forex Investors May Face $1 Billion Loss as Trade Site Vanishes
Why the oil price is falling
How a $600 Million Hedge Fund Disappeared
Hedge Fund Manager Who Remembers 1998 Rout Says Prepare for Pain
Swiss National Bank Starts Negative
Tice: Crash is Coming...Although
More on Edson Gould (PDF)
Schiller's CAPE ratio is wrong
Double-Digit Inflation in the 1970s (PDF)
Quick Link Archive
Dow P/E: 21.36
Dow Yield: 2.33%
S&P 500 P/E: 24.89
S&P 500 Yield: 1.97%
10-Year Note Yield: 2.50%
30-Year Note Yield: 3.11%
WSJ March 17, 2017
DOW VALUE WATCH
Dow Fair Value (50% Principle):
2015 High: 20,125.58
2009 Low: 6,469.95
Fair Value: 13,297.77
+33.75% above fair value
as of February 5, 2017
Index Additions and Deletions
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It was a volatile week for the Dow which closed the week 12 points above 10,000. During the week the Dow climbed as high as 10,300 then fell below 9,900. The charts below illustrate things to look out for.
The Dow has gotten support (green arrow) from the 150 days moving average back in July 2009. Another two supports came at the 50 days moving average. Currently, the market showed some strength in being able to rebound off the moving average and closed well above it.
The Transportation index shows a entirely different story. After a strong run up to 4,200 level, the index appears to be getting weaker and weaker. The index was supported back in July but Thursday closed below the 150 day moving average which is bearish. Moreover, the index tried to break above the 150 day moving average but couldn't managed to get through (red arrow).
The two charts above suggest some kind of divergence between the two indexes. I'm not implying that this is a Dow Theory sell signal but that possibility isn't far out given the way the market is behaving. In addition, even if a sell signal is to occurred, it doesn't mean sell all your holdings and go into cash. Similar to a buy signal which investors shouldn't interpret as "all in." Investors should instead focus on seeking fair profits which isn't hard to understand but rather hard to implement.
Short-term rally could come within a week or two as the bottoming in several technical indicators (RSI & MACD) indicated.
I suggest everyone to revisit our article 3 Steps to Investment Success for a better understanding of our investing strategy.