In my previous update, I didn't have the most recent economic...

In my previous update, I didn't have the most recent economic economic data flowing through to my economic indicator. This information was available, however it was not automatically feeding through to my system at that stage.

Fair value range is defined by the value based on consensus earnings forecasts [4,283], and on earnings adjusted for leading economic indicators [4,344]. Currently the ASX (XJO/S&P200) is sitting below the range at 4,288(2nd Dec). Compared to the last update on 30 November, the most significant change has been an update on the economic data feeding through to the earnings indicator, which has increased from 4090 to 4344.

The average value appears to be at around 4300 for now. This continues to support my thesis that we continue to experience a range-bound market. During the recent rally to around 4300, net sellers have reduced in number by around 14% from 213 to 183. Sentiment indicators appear to be balanced for now, helping to support a range-bound market.

So whilst I can see the XJO moving as high as 4400, I don't think we will have a significant Christmas rally based on fair value metrics. I'm leaning toward the idea that we see swings around 4300 levels.

Full details at: http://macrovalueinvestment.com/?p=226