S&P 500 Index – 25% to go to all-time peak

28-Dec-2010

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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

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By by Prieur du Plessis,

The S&P 500 Index yesterday advanced for the 13th time in 15 sessions, reaching a two-year high – a level last seen before the collapse of Lehman Brothers in September 2008. According to the Advisors Sentiment of Investors Intelligence, the percentage bulls increased to 58.8% over the past week – a new high since October 2007 when the number peaked at 62.0%.

A flood of liquidity has propelled the Index to 85.4% above the bear market low of March 9, 2009, meaning another 24.8% increase is required to reach its all-time high of October 2007. The chart below, courtesy of Doug Short, illustrates the up and down movements.

Source: dshort.com, December 21, 2010.

The tables below indicate the 50- and 200-day moving averages for most important global stock markets, with the top table showing mature markets and the bottom one emerging markets. The key numbers to focus on are the columns titled “STDEV from 50 Day” and “STDEV from 200 Day”. The figures show how many standard deviations various stock market indices are above the moving averages (red) or below the averages (green).

Click here or on the table below for a larger image.

Click here or on the table below for a larger image.

It is interesting that a number of bourses are very extended relative to their moving averages, including Northern Europe, U.S. large caps, U.S. small caps and a variety of emerging markets (including the MSCI Emerging Markets Index that trades 2.2 standard deviations above its 200-day mean).

At the other end of the spectrum, the markets that have corrected most significantly include over-indebted situations such as Greece, Belgium, Spain, Portugal and Ireland. A few former high-flying emerging markets such as Brazil have also seen significant mean reversion to the key moving averages.

The nascent rally could extend into January, but one should be very cautious here given the overextended condition of some markets, especially against the background of the overbullish sentiment, and run with fairly tight stops.

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