2024-09: The risk may be in the stock valuations: semiconductor trending down, healthcare trending up predictive of S&P 500

As of Tue 24 Sep, the following factors are computed by tsterm.com to be causally predictive of the S&P 500 ETF SPY (six months out):

1. Micron Technology MU (semiconductor)

2. DuPont de Nemours DD (industrial)

3. Amgen AMGN (biotechnology)

4. KLA Corporation KLAC (semiconductor)

5. Health Care Sector ETF XLV

In other words, in order to predict the possible scenarios of the SPY’s price on the day in six months, the engine decided that the top five are most influential factors.

The richness of a stock’s valuation can be characterised by the price-to-earning (P/E) ratio. It is a multiplier by which that market decides to pay X dollars for 1 dollar net earning from the business. We list them below:

MU. negative earning, no P/E ratio

DD 120

AMGN. 56

KLAC. 38

whilst the historic median of the P/E ratio of the S&P 500 index ranges 14-18 depending on the period of calculation (https://www.multpl.com/s-p-500-pe-ratio).

In the August 2024 post, we analysed that compared to biotechnology, the industrial Dupont was more dependent on global sales.