Submitted by Pater Tenebrarum via Acting-Man.com,
Dismal Earnings, Extreme Valuations
The current earnings season hasn’t been very good so far. Companies continue to “beat expectations” of course, but this is just a silly game. The stock market’s valuation is already between the highest and third highest in history depending on how it is measured.
Last week's decision by Angela Merkel to allow a Turkish criminal complaint against a German comedian is now causing serious problems within her coalition. As a reminder, German comedian Jan Bohmermann faces up to five years in prison for performing a satirical poem directed at President Erdogan.
In January and in early February UBS' technical analysts said that while they do not believe in a 2008 event, 2016 should be a highly volatile and a trading oriented year for equities... and so far it has. But now Michael Riesner and Marc Muller see a high likelihood to move into our suggested early Q2 cycle top this week.
With last week’s higher low at 2033, we have a new pivotal support in place in the SPX, which makes 2033 to a tactical key support.
One day after stocks were this close from hitting new all time highs on what have been either ok earnings, if looking at non-GAAP data, or atrocious earnings, based on GAAP, and where any oil headline is now immediately translated as bullish by the oil algos, so far futures are relatively flat, while European stocks were at their moments ago in anticipation of the latest ECB announcement due out in just one hour. However, unlike last month's "quad-bazooka", this time the market expects far less from Draghi.