by Dave Kranzler, Investment Research Dynamics:
The Dow/S&P 500 indices are currently more overvalued relative to underlying fundamentals than at any time in the history of the U.S. stock market. This especially true if you weed out the non-cash net income “adjustments” companies are now allowed to pile into their GAAP income statements in order to puff up their earnings per share facade.
Really, it’s not pathetic or absurd, it’s outright childish. And the stock promoters and Wall Street “experts” who claim the stock market represents good value now are either tragically mentally disabled or insidiously corrupt. Likely more of the latter than the former (Jim Cramer, Steve Liesman, anyone on Fox Business or Bloomberg News etc).
I guess the tipping point for me was this idiotic article that appeared today on Marketwatch: Why 100% of your investments portfolio should be in stocks. If there were ever something ringing the bell at the top of a market, it has to be that article.
Per this Zerohedge post, there’s just eight stocks which are keeping the S&P 500 being negative this year: Amazon, Google, Facebook, Home Depot, O’Reilly, Netflix, Nike and Starbucks. These are the stocks in which momentum-chasing hedge funds have highly concentrated holdings.
I know from watching AMZN everyday closely over the last six months that whenever both AMZN and the stock market open up red, when Amazon goes green the rest of the stock market follows. Yesterday (November 10) was a perfect example of this. In other words, AMZN plus the other 7 stocks listed above are being used to keep the stock market propped up.
But beneath the surface of the S&P 500/Dow, dozens of stocks are crashing. Here’s four high-profile examples, but there are many others (click to enlarge):
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