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Here is a short article (on Seeking Alpha) from my investment advisor. . .



HDO: Market Update November 7, 2016

Nov 07 1:56 PM (Updated on Nov 07 6:07 PM)

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Summary

•Market update and S&P 500 Trading Range.
•How would the results of the elections impact the markets tomorrow?
•Key Earnings Reports.


Dear HDO Members,

The equity markets are bouncing back strongly, with the S&P 500 up by 2.1% right now. As I stated in my last two market updates, this was bound to happen as they were technically too oversold. Election or not, the signs were clear that a bounce was coming due to an overbought VIX volatility index, major indexes being technically oversold, and too many investors were betting against the market. The good news is that the S&P 500 index held perfectly its key support level.

What comes next?

Right now, the S&P 500 index is sitting right on its 20-day moving average, the 2126 level. If this level holds, then the bulls are likely to take a shot at the 50-day moving average which now stands at the 2147 level. If it stalls - which it could - then we're back sideway trading range. The VIX is down by 18%; that's a plus for the bulls. However, it still remains well above all key technical levels.

So now the trading range for the S&P 500 index is pretty well defined:

To the upside: If today's gains on the S&P hold the 2126 level, then the next target is the 2147 level.

To the downside:The 2084 level is now key support.
The early momentum for equities is currently still strong.

Today's rally was partly supported by the fact that Hilary Clinton was cleared from the FBI investigation on Sunday. This news has a double positive effect:

It reduces the chance of a Trump election which could be viewed as a negative for the equity markets.

It eliminates the chance of a much worse scenario: Until the recent FBI announcement, there was a real chance that Hillary Clinton would be elected and then subjected to a criminal investigation, possible prosecution and impeachment. This would create a constitutional crisis and might paralyze the federal government for months or even years. Imagine what would happen if a new president is indicted. A lot of uncertainty for sure.

How would the results of the elections impact the markets tomorrow?

If we see Mrs. Clinton wins tomorrow, today's market rally is likely to continue.

On the other hand, if Mr. Trump wins, we may see a temporary and small market pullback. I do not foresee a large market pullback because a Trump win would be a mixed result. While we may see an initial selloff due to perceived uncertainty, after reality sets in, investors would realize that Trump is promising to reduce capital gains taxes. Many investors are currently sitting on positions which have major unrealized appreciation; There will be a reluctance to liquidate these positions until capital gains taxes are reduced. This would limit any short-term selling. In addition, a Trump election should result in a depreciation in the value of the dollar which would be a positive for US corporate earnings (as denominated in dollars).

My recommendation at this point is to remain fully invested. I will be following up on the markets and keeping HDO members updated.

So Hillary is a plus for the equity markets, they think she is their gal.

And to the Dems and Bernie crowd she is going to take on Big Banks, Wall Street and make the rich Pay their Fair Share!?!?!?!?

Someone is getting played..................

I think that those four words should be the basis of a 3-credit college course on the stock market.

The fact that she's allowed to run for office is indicative of a constitutional crisis.

But it's been going on for quite some time. If it was going to crash the stock market it would have already done so.

Trump needs to get elected & the market need s BIG correction............it's way over valued based on performance & no one in their right mind would do any serious volume buying (in general) at the current prices, specific instances, maybe.

Companies for sale are commanding far too high a multiple to be good investments & those paying those prices will end up taking a big hit.

The pandering to Wall St. needs stop until such time as there is a significant does of reality injected.

The speculators want to speculation to go on forever & that's just not going to happen absent significant performance.

JMHO, YMMV.

MM

Sometimes the markets rally when an unknown is taken out of the equation, whether it makes sense or not. So in this case, regardless of who wins, they may think some of the chaos is over and it's going up in anticipation of that. Reality always sets in shortly after.

Sometimes. 😜🤑

The market is up because of Comeys Sunday statement. Wall street wants H to win and keep the crooked chitt going to screw the small investor. They fear trump upsetting their gravy train.

This ^^^^

And a 2.1% rise is not exactly up strongly.............

MM

No chit... I'll take the equity hit to have Trump any day... seems wall street shills are stupid too.

Here is an eye opening response to your feelings about an over valued market (From Seeking Alpha)

Are Equities In General Or Dividend Stocks In Particular Becoming Expensive?

Sep 24 3:01 PM (Updated on Sep 24 4:06 PM)

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.



Dear HDO Members,

I would like to share with you a summary of a report issued on August 31, 2016 by James Paulsen Ph.D from Wells Fargo Capital Management about equity valuations. The key points highlighted in this report are the following:

As the U.S. bull market completes its 90th month making it one of the longest on record and rising by more than 3.2 times or annualizing at about 17% per annum, investors are understandably becoming more and more concerned about valuation risk. Indeed, many traditional valuation benchmarks suggest the stock market has become highly if not richly priced. For example, based on the trailing 12-month earnings per share, the current price-earnings multiple on the S&P 500 Stock Price Index recently rose to 20.4, almost 30% above its post-war average.

Comparing valuations to historical trend lines

Although traditional valuation parameters may be flashing yellow, unconventional trend-line analysis suggest the stock market still looks reasonable if not attractively priced. It is always useful to consider alternative thoughts and non-consensus approaches in assessing important investment questions. To this end, examining the U.S. stock market relative to its historic trends yields several unconventional insights regarding both overall stock market potential and also what investment factors (e.g., growth, value, capitalization, or price momentum) and sectors may lead the rest of this bull market.



Why use historical trendlines? U.S. stocks have oscillated about a stable trend since WWII. To the extent this stable trend remains persistent, it provides another methodology to judge potential risk and reward in the stock market. Relative to trend, U.S. stocks have been extraordinarily cheap three times since 1945:

•Immediately after WWII.
•In the aftermath of the high inflation 1970s.
•After the Great 2008 crisis.

Similarly, stocks appeared richly priced throughout the 1960s and during much of the time between the mid-1990s until the late-2000s.

Today stocks surprisingly appear reasonably-priced or even cheap relative to post-war trend despite being one of the longest and strongest bull markets of the post-war era, as shown in Charts 1 and 2 above, the U.S. stock market is still at worst fairly priced and even cheap relative to its post-war trendline.

Dividend Stocks Cheap relative to Trend line

Based on the historical trend line chart below, dividend stocks appear to be trading at multi-year low valuations:



Not all High Dividend stocks are cheap

While high dividend stocks in general appear to be cheap, some are more expensive than others. This is especially true for Utilities Stocks which seem to be the most expensive dividend stocks:



Therefore the key to successful high-yield investing is to be positioned into high-yield sectors which are still cheap. This is one of the main reasons why the "High Dividend Opportunities" portfolio is underweight utilities stocks which I personally view that they are too expensive when looking at most valuation metrics.

Conclusions

The following are the conclusions of the Wells Capital Management report:

While the S&P 500 currently sells at a fairly high 20 times trailing earnings, it also is about 3% below its post-war trendline average. In both major previous bull market cycles of the post-war era (during the 1950s-1960s and again in the 1980s-1990s), the S&P 500 Index ultimately peaked out at least 50% above trend line.

The Total U.S. Stock Market Index (a much broader index which includes all stocks on the NYSE, AMEX and NASDAQ exchanges) currently trades almost 25% below its post-war trend line making it cheaper than 78% of the time since WWII.

Many portions of the U.S. stock market remain remarkably cheap relative to trend line including large cap value stocks, small cap growth stocks, strong price momentum stocks and even high dividend yield stocks.

Risk-adverse fundamental factors have surprisingly dominated the stock market so far in this bull market. This is a rather odd result after a relatively long and strong bull market probably which reflects the odd "fear-based economic recovery" experienced since the Great 2008 crisis. Consequently, relative to their respective historic trends, current valuations favor over-weighting "risk-on factors". What Wells Capital Management means by this is that stocks which carry more risk are much more undervalued than conservative stocks. This is also true of High Yield stocks.

I have posted a link to download the full report produced by Wells Capital Management on August 31. To download the report, please click here.

The most important thing to note is that the equity markets have just broken out the upside, something which rarely happens. Our plan is to remain fully invested to maximize our profits from this strong up-trend.

He would bitch that it wasn't cash! He has a terminal case of the "I know more than everybody" and his ignorance knows no boundary. IMHO

Good point.

Markets hate uncertainty. That is why you saw a selloff the last week or so.

Now the Markets are saying the Beast is in, policies will remain the same and the markets will continue to rocket.

Remember the markets are up 300% over the last eight years and are still near record highs.

Don't get me wrong I'd be happy to take a haircut to see The Big T win.

Orange Okie, that is very interesting about the last paragraph about high risk and high yield stocks are undervalued. My son and I have noticed this in Mortgage reits. My son, 19 bough $ 1,000 in NLY . The price is the same as in 1999. Seems no reason for this so he bought. I most likely will go into high div. stocks cause am disappointed in low div. growth stocks and mutual funds.

If there's a silver lining that's it!! Which makes me an IDIOT!!

The market will go up a bit if Hillary wins, because they know Yellen will jack up the Fed interestvrates more slowly if she does. Yellen isn't gonna do a thing to interest rates until Obama is gone, because they can't risk "tarnishing his legacy".

Either way, rates have to go up at some point, and I don't think they can hold off for 4 years. It's time for another recession, so the question is, slow and long with Clinton-little/no recovery, or fast/hard with Trump-then recovery???

The stock market we've seen over the last few years is not the resultvof a strong economy, but easy money Fed policy. Job growth has been a joke, barely keeping up with immigration, much less the increase in the native population. GM was strong earlier in the year, but auto sales are starting to fall again. Ag equipment sales are down, and so is CAT (construction equip).

At some point, reality is going to hit. A strong market and a strong national economy are NOT the same thing. A country that doesn't have a strong manufacturing base, can't stay strong. A "service economy" is not the key to a bright financial future. Look at most of Europe (excluding Germany).

Your usually pretty smart byc, until it gets to sunday.

As the debt & imbalance of trade continue to rise...............

When will the house of cards fall?????

MM

Beware mortgage REITs with another interest rate rise by the feds on the horizon.