macro's xjo fair value: 4090-4271

Posting again, if anyone is interested.

Fair value range is defined by the value based on consensus earnings forecasts [4,271], and on earnings adjusted for leading economic indicators [4,090]. Currently the ASX (XJO/S&P200) is sitting below the range at 4,058 (28th Nov). We have seen a consistent reduction in consensus earnings forecasts, as well declines in the economic indicators. At this stage, however, it appears that fair value for the index remains above 4,000.

Except for a declining earnings outlook, fundamentals remain solid. Investor confidence surveys, as a contrary indicator, suggest a relatively positive environment. Put-to-call ratios do not highlight any significant divergences. Expectation is for a relatively flat market environment, with volatility both upwards and downwards of fair value.

Full details at: http://macrovalueinvestment.com/?p=197