NDR Tim Hayes: 3-5% Correction Ahead
Published November 12th, 2010 in Trading Tags: bloomberg, bull market, correction, NDR, Ned Davis Research, presidential cycle, Tim Hayes, valuation.Tim Hayes, chief investment strategist at Ned Davis Research, stopped by the Bloomberg studios for a brief interview:
NDR has been very bullish for some time now. They actually went maximum overweight equities in early April, just ahead of the intermediate market top. And they remained with that thesis throughout the summer: NDR Continuing Bullish.
As Tim Hayes mentions, one of the primary reasons for NDR’s bullish views have been the historical performance of stocks within this specific period according to the US Presidencial cycle:
Valuation also remains relatively low. But the market is obviously overbought at the moment. So NDR wouldn’t be surprised by a short term correction within a continuing bull market.
I’m always comforted when my own views coincide with those of NDR and other technical minded luminaries like Lowry, Leuthold, etc. For the moment I’ll take the solace that it offers.
bloomberg, bull market, correction, NDR, Ned Davis Research, presidential cycle, Tim Hayes, valuation
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5 Responses to “NDR Tim Hayes: 3-5% Correction Ahead”
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I’ve always been impressed by the work of NDR but I must say I’m a bit surprised that they missed the summer correction. That was a pretty good sized drawdown. Perhaps I’m expecting too much?
Aristotle, no firm, no matter how resourceful and experienced has a crystal ball. Having said that, NDR usually looks beyond such choppy moves for the very large trends.
Valuation is not fair. The smoothed 10 year P/E is 22x - that is 38% in excess of the historical average.
If NDR wants to use a forward P/E of 14x on EPS that are dependent on an environment such as the one we are in (i.e., China, Europe, rapidly rising input costs, weak US, austerity globally), be my guest.
I met with Tim this week in my office. He’s been very right on the market from April 09. They did publish some concerning notes about a pullback for mid April. He’s for sure expecting a pullback now (actually they have been expecting one for a month). The Crowd Sentiment Poll is extended at 69%. One thing Ned has been concerned about is earnings expectations which are very extended - typically the market does not do well with this condition.
I follow a lotta folk, and must say NDR is at the forefront when it comes to market prescience.
They rock.