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Monday, May 18, 2009

TheChartStore - Week two

UPDATE: 7:12pm - fixed second chart
Ron at the Chart store by now has to have a dart board with my name on it. I have pestered this guy for two weeks on reprinting some of his charts from his pay-for-view blog. Again, so far, Ron's charts aren't helping me pick stocks, but definitely is giving me perspective of the over-all market and sectors.

Rons blog this week has over 42 charts highlighted out of his 5,000 charts. Many of the 42 charts look tailor made for the weekly blog entry.

One of his charts shows the S&P500 Price/earnings ratio of stocks. Depending on assumptions, WORST case is depicted on the graph below. Best case puts Price/Earnings at 24.75x, which historically is not a "cheap" level for stocks. The take away , at the current US Stock market valuation, stocks are NOT cheap, and at worst case deserve to be easily 1/2 their current value.
From WebSurfinMurf's Financial Blog

Related to above chart is historical level of earnings report for S&P500. Extrapolating 2009 yields later in the year first time negative earnings for S&P500. Again, this isn't to say the extrapolation is right, but it does show that US Stocks are NOT cheap at this level.
Translation: Stocks SHOULD go lower.
From WebSurfinMurf's Financial Blog

So once again, I am touting The Chart Store service with the blog option. I get no commission, just sharing some of Ron's work.

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