Call Probable Return News Today

Larry Berman: What does market breadth tell us about when to buy the dip? VIDEO SIGN OUT All my valuation models are still off-the-charts extreme, which means that longer-term, forward-based returns are likely well below average and correction risks are elevated. Economic conditions overall are supported by massive expectations for more stimulus and central bank support. This could, and maybe should, last into 2022, but you can already see that massive stimulus is getting bipartisan pus...

Larry Berman: Credit markets not pricing economic risks correctly VIDEO SIGN OUT The continued saga over the central bank printing press is creating a degree of moral hazard never seen before. In the S&P 500, there are about 10 per cent of companies that do not earn enough to cover their interest payments and about 150 that are not investment grade. These are being kept alive by cheap money—and this was all happening before COVID. The numbers are worse today, though implied support...

Larry Berman: Liquidity-driven market about to have less liquidity VIDEO SIGN OUT With major moves in global equities being influenced by central bank liquidity, the markets may now require fiscal policy to extend recent gains. This phenomenon has a name: the equity risk premium (ERP). Basically, it’s the excess return in stocks relative to the risk-free rate. So there’s an imbalance in fundamental supply and demand of the cost of money. This analysis from the Congressional Bu...

Larry Berman: Speculation in call volume hits all-time extremes VIDEO SIGN OUT With options expiring this week, we wanted to have a look at the impact it’s having on markets. It’s huge. In the past week we have seen all-time call volume records challenged (viewers can follow the CBOE data here). It seems the new stimulus cheques are finding their way into Tesla Inc. call options and others. Speculators have had a voracious appetite (call it FOMO plus leverage) and they have be...

Larry Berman: Valuation for U.S. large caps has never been higher VIDEO SIGN OUT Historically, the last show of the year I do my fearless forecast for the coming year. This year, it is a bleak from a pure valuation perspective. But from a liquidity perspective, it’s up, up, and away. Our first table shows the Street has an average 23.69 multiple on 172.50 gives you an average S&P 500 target of 4085 for yearend 2021. JP Morgan is the high at 4,400 with several at the low of 3,800. T...

Larry Berman: Seasonality in Bidens first year could surprise euphoric investors VIDEO SIGN OUT The next indicator in my PRO-II (Pro-Eyes) series looks at seasonality patterns. Like many indicators, they tend to be relatively short-term in nature and scope. Seasonality is one such indicator. This can be helpful for tactical trades or timing potential entries into expected periods of weakness. You have probably heard of the “Sell in May and go away” seasonal pattern. It stems f...