We here at Running of the Bulls pay some attention to analysts' forecasts for company earnings, but not a whole lot because forecasting is less of an exact science than handicapping football games and predicting the weather.  Via Paul Kedrosky, the green line is analysts' forecasts of future earnings while the blue line is actual earnings.

I never understood the arguments of those who said the dollar was going to "collapse."  Collapse against what?  The euro?  The yen?  The pound?  The yuan?

I have no idea what caused the collapse intra-day today, whether it was a bad trade or the withdrawal of liquidity by the machines or what.  What I do know is that it was amazing to watch.  At one point, the Dow was down nearly 1,000 points.  I have never seen anything like it.

I got lucky.  On Monday near the close, I hedged out all my equities positions to net flat.  I had also been buying gold calls the past week and have been long the dollar since the beginning of April.  So my book since Monday's close has been long gold, long the dollar.  

Who wouldn't be?  From the FT.

In a week in which Goldman Sachs executives were hauled over the coals for allegedly structuring a deal that they expected to fail, angry members of a US senate committee invoked a city that had little to do with the bank but everything to do with negative public attitudes towards Wall Street.

The median price/earnings ratio of the Russell 3000 is currently 16.6x 2010 earnings.  The median forward PE for the Russell 1000 is 16.8x.  The median forward PE for the Russell 2000 is 16.5x.

The long-term average forward PE is 14x.  Thus, the average stock is somewhat expensive but not egregiously so.

However, profit margins are above long-term averages.  If profit margins revert to mean, then stocks are more expensive than they appear. 

Margins matter more in the long-run than the short-run, though.  Thus, over the near-term, valuation is not worrisome.

Byron Wein once called Europe an "open-air museum."  It is hard not to see why.

The market goes up almost every day.  Any dips are frantically bought.  Marketwatch notes that the buying power is extremely strong.  Until this condition changes, the market is going higher and declines will be limited.

What I have in mind is a rare buy signal that was generated a couple of weeks ago by a trend-following indicator with a good long-term record. Prior to the recent buy signal, there had been only 12 of them since 1967.