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"The Next Big Move In Stocks Is Down" August's Crash-Whisperer Warns "Nothing Has Been Solved"

Tyler Durden's picture




 

"I don’t fault anyone for taking some money off the table here. The stock market is not cheap," warns one portfolio manager as valuations that have been above historical averages for months are being pushed higher even as revenue and profits decline. "The correction didn’t really solve a whole lot," notes Leuthold CIO Doug Ramsey - whose bearish research foreshadowed the U.S. stock market’s first correction since 2011 in August - warning, as Bloomberg reports, that "you have all the same underlying market fissures in place, yet they will have lasted another six months," forecasting the S&P 500 will be 20 percent to 25 percent lower in 2016 from its record high in May of this year.

The rebound that has lifted equities since August doesn’t mean the mispricings that drove the rout have gone away. As Bloomberg reports,

If anything they’re worse, according to the chief investment officer of Leuthold Weeden Capital Management LLC, who says valuations are higher than when the selloff began because of deteriorating revenue and profits.

 

The Standard & Poor’s 500 Index is trading for 1.8 times sales, about where it was in August, while industrial stocks last week were priced at 20 times earnings, the most in more than a decade.

 

This is no message from a permabear.

Ramsey correctly called the broad rally in stocks that started in 2011.

 

His call now that the S&P 500 will be 20 percent to 25 percent lower in 2016 from its record high in May underscores the concerns many have about the strength of the economy and the ability of companies to boost earnings, even with the unemployment rate having fallen to the lowest level since 2008.

 

“The correction didn’t really solve a whole lot,” Ramsey said in a phone interview. “You have all the same underlying market fissures in place, yet they will have lasted another six months.”

 

...he warned in early August that the “next big move in stocks should be down,” citing weakening breadth.

 

 

 

“I’m the wounded bear up in the north country,” said Ramsey, who until 2014 was one of the staunchest advocates for the 6 1/2-year old bull market. “But I still think the odds are very high that the top was in May. I still think we’re looking at a cyclical bear market.”

 

Valuations that have been above historical averages for months are being pushed higher as revenue and profits decline, Ramsey said.

 

“Underneath the surface, there are lingering concerns over the overall health of the economy. There’s still a lot of uncertainty out there.”

Finally, we leave it to another manager to sum up...

"It’s going to be difficult for companies to engineer higher earnings without that stronger GDP growth rate,” said Mangan of James Investment Research in Xenia, Ohio, which oversees about $6.4 billion. “I don’t fault anyone for taking some money off the table here. The stock market is not cheap.”

 

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Mon, 11/16/2015 - 14:33 | 6800678 FreeShitter
FreeShitter's picture

Probably see much lower than Aug lows by next spring at the latest.

Mon, 11/16/2015 - 14:38 | 6800703 LowerSlowerDela...
LowerSlowerDelaware_LSD's picture

sell!!!   SELL!!!   SELL!!!

 

 

I had to get that out of my system.

 

 

Sold.

Mon, 11/16/2015 - 14:39 | 6800706 UndergroundPost
UndergroundPost's picture

“I don’t fault anyone for taking some money off the table here. The stock market is not cheap.”

More like overpriced and violated in any exploitable opening like an uptown Spitzer whore

Mon, 11/16/2015 - 14:42 | 6800731 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

this idito doesn't understand the PPT

Mon, 11/16/2015 - 18:40 | 6801907 muppeteer
muppeteer's picture

expect the PPT to stick around until insiders are net short and retail is holding the bag. only then will we pop this fucker and kick the legs out.

Mon, 11/16/2015 - 16:13 | 6801198 dimwitted economist
dimwitted economist's picture

probably see much lower than Aug lows by next spring at the latest.

I will Guess WW 3 comes First.. 

Mon, 11/16/2015 - 16:48 | 6801406 FreeShitter
FreeShitter's picture

That's a good bet, I am surprised we still have a functioning as in just that economy with bdi hovering near record lows.

Mon, 11/16/2015 - 14:34 | 6800684 WTFRLY
WTFRLY's picture

Bcoz. ISIS.

Mon, 11/16/2015 - 14:34 | 6800686 JustObserving
JustObserving's picture

The stock market has not been cheap since the financial crisis of 2008.  Yet it keeps going higher due to buying by the Fed or Old Yeller's put, whatever you prefer

Manipulated markes never make sense

Mon, 11/16/2015 - 14:44 | 6800742 4shzl
4shzl's picture

Any number can be cooked.  If "sales" is the metric causing a problem, then Wall Street will cook it (channel stuffing, etc.).

Mon, 11/16/2015 - 15:53 | 6801085 Gambit
Gambit's picture

Yes, channel stuffing is all good and all until you run out of cash... Then poop down the drain you go

Mon, 11/16/2015 - 14:35 | 6800690 slaughterer
slaughterer's picture

Too early to short, still.  We have to catch the first half of the Santa rally and Q4 buyback pigfest before the fear of the horrible "rate hike" kicks in, which will spoil the second half of the Santa Rally.  

Mon, 11/16/2015 - 14:47 | 6800764 sopko16
sopko16's picture

Isn't shorting a waste? Everyhting in the history of the world has been goosed to just go upward. In fact, the whole system relies on that to happen... I'd only be short if I was a market maker and had to build inventory while I was making profit OR if I had a way to get a great deal on OPTION or CDS that wants the market lower. But yeah, would need to be a GREAT deal.  :)   Just my opinion though.

Mon, 11/16/2015 - 14:36 | 6800700 slaughterer
slaughterer's picture

If we go full dot-com retard on price-to-sales, then ES might just meet Tom Lee's 2350 ES target.  

Mon, 11/16/2015 - 14:41 | 6800723 Balvan
Balvan's picture

Stocks keep outperforming PMs, Zerohedge in ruins, waiting for the crash which never happens. This site was created in 2009 right at the stock market bottom, great contrarian indicator.

Mon, 11/16/2015 - 14:48 | 6800771 MadVladtheconquerer
MadVladtheconquerer's picture

Calling 30 of the last zero tops.

Mon, 11/16/2015 - 14:43 | 6800735 buzzsaw99
buzzsaw99's picture

ain't nobody taking shit off the table bitchez

Mon, 11/16/2015 - 14:44 | 6800743 DOGGONE
DOGGONE's picture

Real Dow history through last Friday

http://www.showrealhist.com/recDJIAtoRD.html

Mon, 11/16/2015 - 14:45 | 6800752 Guitarbill
Guitarbill's picture

Yea right, tell that to Mr Algo!

Mon, 11/16/2015 - 14:52 | 6800790 Kreditanstalt
Kreditanstalt's picture

The governments are surreptitiously buying stocks, via ETFs, via proxies, via central banks or their agents.

Mon, 11/16/2015 - 15:01 | 6800829 Thisisbullishright
Thisisbullishright's picture

Just print MOAR and MOAR and everything will be ok!

 

Mon, 11/16/2015 - 15:04 | 6800842 Zero-Hegemon
Zero-Hegemon's picture

NATO GOING TO WOAR!

DOW 50,000!

Mon, 11/16/2015 - 15:12 | 6800884 One Solution
One Solution's picture

Bullish!!

Mon, 11/16/2015 - 15:23 | 6800927 Dollarmedes
Dollarmedes's picture

Same pattern in the 1930s: drop a bunch, test to see if the bottom was reached, go up some, then fall a bunch more when they realize nothing has changed. That cycle happened 7 times over the next 3 years before the actual bottom was reached.

Mon, 11/16/2015 - 15:31 | 6800975 jubber
jubber's picture

Spoos up 40 fucking points just total utter bollox

Mon, 11/16/2015 - 15:50 | 6801063 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

"I don’t fault anyone for taking some money off the table here. The stock market is not cheap,"

...some money off the table?

Take all the money off the table and then sell the table on craigslist.

Mon, 11/16/2015 - 17:59 | 6801715 Who was that ma...
Who was that masked man's picture

A table with three broken legs ain't worth much.

Tue, 11/17/2015 - 11:54 | 6804572 Zero-Hegemon
Zero-Hegemon's picture

Curb Alert!

Do NOT follow this link or you will be banned from the site!