USA CPI drops to 1.9% in December, below Federal Reserve target of 2.0%, UK Industrial production falls 1.5% YOY, Italian industrial production falls 2.6% YOY, Spanish industrial production falls 2.6% YOY. BioTelemetry increases in Fair Value, PetMed Express moves to BUY.
The Stock Fair Value Change Report now can link you directly to the stock that is being updated. Simply select the ticker in the box and the respective stock chart will appear. No more having to go back to the main menu. All reports, updates and e-mail messages will include this link for subscribers.
The markets made some large-scale changes in character that started early in 2018, built up throughout the year and changed direction in the 4th quarter. Valuations increased throughout 2018 moving well into overvaluation and adjusted back to fair value in the 4th quarter of 2018. Several market areas moved past fair value neutral (100% Fv) and on to the undervalued side. All of the markets have returned to the overvalued side of neutral fair value but remain well within fair value range.
All Market Capitalization Categories Remain Well Inside Normal Valuation Levels with MidCap Holding Highest Expectations. Current Market Considerations Remain Tilted to Buy/Buy Watch Classifications as Opposed to the Strong Sell/Sell Watch Tilt that Developed in 2018.
Since the beginning of the stock exchange in 1792, the concept of stocks moving together in a market has been taken as a given. This long held belief of synchronous or similar stock price movements is true in the majority of cases, but not as strong as many investors believe.
There are several new market index additions that will appear throughout the service. We have added an International Aggregate Bond Index [IAGG]. Since the Aggregate Bond Index [AGG] is predominately USA domestic we wanted to add a broad representation of the global bond market. International High Yield Corporate bond has also been added with the HYXU index to complement the International Investment Grade Corporate Bond Index [IBND].
The corrections that took place in the last quarter of 2018 moved the market from an overvalue tilt to an undervalue tilt and opportunity. Many of the stocks that were overvalued, classified as SELL/SELL WATCH moved back to reside within the fair value range. Thirteen percent moved out of SELL/SELL WATCH to HOLD. HOLD grew from 62% to 67%. Just as overvalued stocks moved back into fair value, fair value stocks fell into undervalue. Eight percent of the overall market moved into BUY/BUY WATCH classification.
The past year (2018) was not kind to investors, but the market entered the year overvalued and was expected to perform below the long-term average. Unfortunately, as the year progressed, overvaluation pressures increased and eventually investors realized that expectations would not be achieved. The market is now slightly on the undervalued side of a normal valuation range. In 2019 we expect the market to perform slightly better than the long-term average at 8.83%, but not as well as the mid-term average.
USA LargeCap stocks continue to move to the Undervalued side of market neutral range and now are nearly 4 points under 100% fair value at 96.1% Fv. Nineteen of the thirty-six sectors are now under this level which is 63.3% of the total market. Eight of the ten LargeCap sectors are now below this level and on the undervalued side of 100% Fv, but still in market neutral range. Selling has gone well beyond rational levels.