Below are the downside targets for ViacomCBS (VIAC) based on the work of Edson Gould.
Using the Speed Resistance Lines of Edson Gould is ideal since it is a relative scale for every stock no matter the price. Additionally, parabolic increases have been consistent in achieving the conservative target in the past (except in the case of Telsa).
Posted in Speed Resistance Lines, SRL, VIAC
Review:
On June 11, 2020, we said the following of Consumer Sentiment:
“The rapidity of the stock market decline and recovery and failure to achieve new highs suggests that the Dow Jones Industrial Average, as a sentiment indicator, will retest the prior low (-15.47%) opening up for testing of past graveyard levels.”
Our assessment was wrong as we did not appreciate the fact that there have been few double dips in YoY data on the Dow Jones Industrial Average (only four since 1896).
Outlook:
Below is the data from 1986 to the present for the Consumer Sentiment Survey and the Dow Jones Industrial Average on a year over year basis.
While we have run up against what appears to be the limits of year-over-year gains for the Dow Jones Industrial Average since 1986, there has been eight other occurrence of above 50% y-o-y gains since 1896.
It is possible that the stock market could experience a similar decline of y-o-y increases, as seen from the 1997 peak, where the market moves higher but was unable to exceed the y-o-y gain top of 1997. This resulted in the DJIA going from 8,222 in 1997 to 11,497 in 2000. Likewise, the peak of y-o-y gains in 2010 saw the DJIA increase from 10,325 to 16,516 by 2016 or 21,917 by March 2020.
The University of Michigan Consumer Sentiment indicator has provided little in the way of indicating peaks in the market unless it was in positive year over year territory. Currently, we’re at a distinctly negative level in the Consumer Sentiment indication with only two other periods (2008 & 1991) registering worse levels.
Essentially, consumer sentiment could get worse but not by very much and not for too long of a period in time before a recovery will ensue. Our general view is that a recovery to positive levels in y-o-y changes in the Consumer sentiment level is necessary before the next protracted decline can materialize.
Posted in Consumer Sentiment, Dow Theory, YoY
Review:
On August 23, 2009, in our call that the recession was over, we said the following (when the unemployment rate was at 9.60%):
“I doubt that the general public will agree that the recession is over since jobs will not be as plentiful as the past.”
From the low in 2009 to 2014, many questioned the rising stock market and economy because job growth was not as strong as hoped. However, it should have been understood that to achieve such accelerated job growth comes at a very expensive price.
On July 2013, we said the following of the unemployment rate (when it was at 7.30%):
“It is important to understand that the 10% and 3.8% unemployment rates are undesirable scenarios. The 10% unemployment rate is in the depths of a ‘recession’ and the 3.8% unemployment rate at the height of a overextended economic boom.”
On August 24, 2018, we said the following of the unemployment rate (when it was at 3.80%):
“Presently, we anticipate the unemployment rate rising to the 6.30% level as a natural reaction to the current low levels. While the unemployment rate can go lower, there is a tremendous tradeoff to achieving lower levels. It is quite possible we have seen the best of times with a declining unemployment. Anything below the current levels will come at a tremendous cost in the next recession.”
On March 26, 2020, we said the following, when the unemployment rate was at 4.40%:
“According to the Washington Post dated March 23, 2020, the projected unemployment rate is likely to range from 9% to 30% based on the fallout from the coronavirus (COVID-19). Our August 2018 projection of 6.30% remains, as it is the first stopping point to any higher level beyond Goldman Sach’s 9% or St. Louis Federal Reserve President James Bullard’s 30%.”
The current level of the unemployment rate is 6.20%. All of the assessments on unemployment are based on the work of Charles H. Dow, co-founder of the Wall Street Journal and creator of the Dow Jones Indexes.
The Outlook
There are two probable scenarios to the current unemployment rate in the U.S., the first is a continuation of the rising trend from the 3.50% low established in January/February 2020 or a gradual decrease from the current level of 6.20%.
The continuation of the rising trend is generally assumed to be the course for unemployment. However, the history of unemployment data, whether accepted as accurate or not, is that it rises faster than it falls. After having risen to nearly 15% in the last year (an artificial advance according to Dow’s Theory), the prospects are that we should experience slight adjustments higher from the current level. However, the trend should be for a gradual decline to 4.90% unemployment rate before a re-assessment is necessary.
Posted in artificial advance, artificial depression
Kellogg (K) stock peaked at $72 in July 2020. Since then, the stock has fallen to $57 (-20%) in 2021. The underperformance put the stock on our radar in January 2021 (yellow arrow). Stock has been trading in range since and appears to be breaking out of that range today. Such action is bullish to a technician or chart readers. Fundamentally, the stock is undervalued based on our 10-year target. The two forces, fundamental & technical, appears to be in alignment with one another. It will be good to revisit Kellogg after 6 months or a year to review how this situation turn out.
Below are the valuation targets for Fanuc Corp. (FANUY) for the next 10 years. Continue reading
This week mark a year into COVID-19 pandemic. We saw tremendous drop in equity value followed by extreme rebound. The shift to bear market and shifted back to bull market was likely the fastest one in history. One year ago, our watch list had nearly 200 companies on it. S&P 500 rose 70% in one year and some strategies produced exceptional return far greater than the market. However, this is expected as March 23rd was virtually the bottom of the market. Some companies were trading as if they were going out of business. Below are various strategies performance.
High yield, low P/E, and low P/B produced exceptional gain due to the risk factor coupled with how low their stock price went. As an example, Lincoln Financial (LNC) went from $65 to $17 (-73%) in one month. Unum (UNM) went from $30 to $10 (-65%) in one month. Bigger drop produced bigger rebound.
U.S. Dividend Watch List: March 19, 2021
We pushed through all-time high on major indexes but they couldn’t follow through on Friday. A consolidation at this level would be healthy for the bull to continue its course. There appears to be a shift from growth to value name. If that’s the fact, we see no better place to start your research than with our watch list which contains blue chip name trading at or near their low. Continue reading
Posted in Dividend Achiever Watch List, Dividend Achievers, Dividend Watch List
Tagged members
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Review:
Upside targets:
Below are the upside targets for General Electric. The price targets indicate a range at which the price is expected to experience resistance before continuing the rising trend or before breaking down to the prior downside target.
Those willing to accepted the risk of the price declining to the prior low ($5.49) could strategically accumulate shares based on this approach.
Posted in Edson Gould, GE, upside target
Below are the valuation targets for American Electric Power (AEP) for the next 10 years. Continue reading
Below are the valuation targets for Verizon Communications (VZ) for the next 10 years. Continue reading
Below are the valuation targets for Merck (MRK) for the next 10 years. Continue reading