The outlook is, once again, not particularly sunny. Stocks slipped back over the past week, although bonds were also negative for the week. I wrote earlier about being wary of September and October this year, so I’ve decided to see what the performance has been like. Stock market momentum (differential with the bond market) turned positive August 20, 2012. It appears that the first week of September brought increased stock prices, but the rest of September and October mostly held steady. Still, I’ll take that over a market crash.

The market continues to appear overvalued. The current price implies 12-month future earnings that will be 20% higher. The average P/E ratio of the market is quite high at 17.86. At any rate, the European stocks (FXI) appear to be the most attractive asset class presently.

Apparently, the US market will be closed for a day or two in response to winter storms on the east coast.

Market Outlook October 29, 2012

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