Market mood
As developed in the previous posts, our confidence is improving on the market for the short term, even if it needs to be confirmed.
A key element is the situation on the mortgage business: the credit risk default has decreased the 2 last weeks by 25%. It means that things are evolving in the good direction: the confidence is increasing and then the credit default estimator is decreasing…
If we look at the SPX, we can track its situation with 2 simple numbers:
P/E ratio: 20 & the % of stocks above their 50 days moving average: 44%
With the earnings season in April, it is plausible that the P/E ratio starts decreasing. Right now, it is increasing for reasons that we have commented in previous posts.
An interesting sector within the large cap index is (as usual) the consumer staples (like WMT): P/E ratio of 18.5 with 69% of stocks above their SMA50-days, improving since last month…