It is interesting to see how close the institutional S&P 500 forecasts for 2009 come to the price level possibilities suggested by the S&P 500 chart.  Maybe fundamentals and technicals are converging on an idea, or maybe the institutions use technical indicators more than one might expect.

click image to enlarge

This chart of S&P 500 rather readily suggests a range of around 750 to 1,000 for the S&P, and also a possible retracement level of about 800.  Those numbers are not too different from the range of forecasts put out by the big boys.

On the chart, the 750 and 1,000 levels could be seen as significant resistance and support levels, and 800 could be seen as a likely 50% retracement from the recent high to the March low.

Those same price levels correspond generally to the

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There are many institutional S&P 500 forecasts in the media for 2009, generally ranging from 850 to 1100 with some outliers on each side, but seldom is the underlying detail provided. One of the more common methods of estimation involves normalization of earnings times a reasonable multiple based on history.

This article will attempt to back into some of the leading institutional projections using normalized earnings and historically experienced multiples.

Key Historical Index Price Levels:

The S&P stands now at 924. It had a low of 741 last November and 666 in March. The high in 2007 was approximately 1575. The low in 2002-2003 was approximately 770.

Institutional Estimates:

We cataloged a number of institutional forecasts in a recent article. The forecasts here come from that article plus a few newer ones. Estimate publication dates range from early May through now (issued within approximately a month).

Goldman this week

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There are many institutional S&P 500 forecasts in the media for 2009, generally ranging from 850 to 1100 with some outliers on each side, but seldom is the underlying detail provided.  One of the more common methods of estimation involves normalization of earnings times a reasonable multiple based on history.

This article will attempt to back into some of the leading institutional projections using normalized earnings and historically experienced multiples.

Key Historical Index Price Levels:

The S&P stands now at 946.  It had a low of 741 last November and 666 in March. The high in 2007 was approximately 1575.  The low in 2002-2003 was approximately 770.

Institutional Estimates:

We cataloged a number of institutional forecasts in a recent article.  The forecasts here come from that article plus a few newer ones.  Estimate publication dates range from early May through now (issued within approximately a month).

Goldman this week stated an expectation of 950

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Lots of speculation out there right now. The financial stocks are trading in wild swings as we sift through earnings season. We've heard from Washington that there are "signs the slowdown is stopping" or there are "glimmers of hope" for the economy in 2009. That may be true, but I'd rather look at the numbers. The big time US industrials usually tell the economic tale. I'm seeing weak results from Caterpillar, a href="http://briskycapital.blogspot.com/2009/04/where-is-simulus-money-going.html"which I already wrote about today/a. We also have weak results from Dupont. a href="http://blogs.barrons.com/stockstowatchtoday/2009/04/21/dupont-results-quash-hopes-for-economic-revival/"Here's what Barron's writer Bob O'brien said about this/a:br /br /blockquoteDupont has long been considered one of the classic early-cyclical bellwethers for the global economy. If conditions start to get better - in the auto business, electronics, farm economies - it’s going to show up on DuPont’s books before it shows up in the industrial production data ...

 

 

Timber Values Up While Index Falls

This interesting Wall Street Journal story appearing in today’s editions looks at timber markets. It notes that while the S&P’s paper and forest index has lost more than the S&P 500 in the past 52 weeks, values are actually going up for timber products and land.

New valuation metrics are coming, too, which figure to lift prices more, according to the article.

You can read the story here. 

 

Mutual Fund Managers Deleveraging?

This Wall Street Journal story notes that many active managers are stepping back from 130/30-styled funds. They’re also apparently reducing exposure to anything related to inverse as well as leveraged indexes to help their overall portfolios.

You can read the story here.

 

The Futility Of Forecasting Markets

In his latest column, the Wall Street Journal’s Jason Zweig provides his own unique take on how difficult the prediction game

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Timber Values Up While Index Falls

This interesting Wall Street Journal story appearing in today’s editions looks at timber markets. It notes that while the S&P’s paper and forest index has lost more than the S&P 500 in the past 52-weeks, values are actually going up for timber products and land.

New valuation metrics are coming, too, which figure to lift prices more, according to the article.

You can read the story here. 

 

Mutual Fund Managers Deleveraging?

This Wall Street Journal story notes that many active managers are stepping back from 130/30 styled funds. They’re also apparently reducing exposure to anything related to inverse as well as leveraged indexes to help their overall portfolios.

You can read the story here.

 

The Futility Of Forecasting Markets

In his latest column, the Wall Street Journal’s Jason Zweig provides his own unique take on how difficult the prediction game is, including noting that the

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According to Johanna Bennett of Barrons, WITH STOCK VALUES PLUMMETING and bonds delivering measly returns, it’s a good time to start sniffing out shares with juicy dividends that are for keeps.

Track Johanna’s picks at:

http://trackthepros.com/stocks/category/632

To be sure, dividends generated by the Standard & Poor’s 500 Index are growing drastically slower in 2008 than experts forecast earlier this year.

And though they have fared better than the broader stock market so far this year, total returns from dividend-paying stocks tracked by Standard & Poor’s have fallen almost 15%.  BUT, the best opportunities are in companies that have strong dividends and histories increasing the dividend with balance sheets and expected earnings that will allow continued payments (and increases):

Dividends Can Yield

Some companies with the ability to increase dividends

Company Ticker Mkt Cap Yield EPS ...

Barron’s analyst Tiernan Ray says SELL Blue Nile.

Track his picks at:

http://trackthepros.com/

IN TIME, SHARES OF ONLINE JEWELER Blue Nile should turn from a lump of coal into a gem. Just don’t expect the magical transformation to happen anytime soon.

a. After a 50% decline in Blue Nile’s shares in the last 12 months, there could still be substantial downside as the contours of the U.S. economic downturn continue to come to light.

b. As consumers file for unemployment compensation in rising numbers, see their home values continue to retreat, and put up with lower lines of credit, they’re increasingly ratcheting down their purchases of discretionary items such as the baubles that Blue Nile sells.

c. the stock trades at an eye-popping 33 times next year’s expected earnings per share, even after its collapse.

d. To make matters worse, there’s new competition for investors’ attention.  Zales,

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Barron’s analyst Johanna Bennett recommended Perrigo.

Track her picks at:

http://trackthepros.com/

a. IN THE PAST, CASH-STRAPPED CONSUMERS who gladly substituted brand-name household products for cheaper store brands tended to draw the line at their medicine chests. Not anymore.Increasingly, these consumers have been replacing Tylenol, NyQuil and other leading over-the-counter medications with less expensive store-brand alternatives

b. That’s good news for Perrigo, the world’s largest maker of store-brand nonprescription medicines. The company is well positioned to benefit from a slew of new products set to keep pace with rising demand.

c. Profits are set to climb. So despite trading at a price-to-earnings multiple that exceeds that of the broader market, Perrigo’s share price could set a new record in the next 12 months.

d. They dominate the store-brand market, and are the best positioned to take advantage of growing opportunities. Profits, meanwhile, are visible and growing strong. They

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Alexander Eule, a  Barron’s analyst, recommended Hanesbrands:

Track his picks at:

http://trackthepros.com/categories.php?category_id=203

a. HANESBRANDS IS NOT SEEING much in the way of sales growth these days, but the underwear maker still has much to offer on the bottom line.

b. Last year, Hanesbrands sold $4.5 billion worth of underwear, T-shirts, socks, intimate apparel and athletic wear. The company’s brands include Hanes, Champion, Just My Size, Playtex, Bali, Barely There, L’eggs and Wonderbra. The company says it ranks first or second by U.S. sales in each of its core categories.

c. many investors remain skeptical, a sentiment that was supported in late July by Hanes’ less-than-stellar second-quarter results, which included a 4.4% sales decline. Shares tumbled 18% on the news before settling at a 52-week low of $21.38 on Aug. 1.

c. Chief Executive Officer Richard Noll concedes the company needs to sharpen its focus when it comes to

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