by Kurt Kallaus
Financial Sense
The economy remains weak, earnings are poised to continue contacting for the 6th quarter in a row yet stocks has broken out to new record highs in August from an important technical base. Without a strong rebound in earnings, we have a price-earnings multiple expansion stretching the faith of many investors. Option trader optimism in terms of call option buying seems to have peaked and the Advance-Decline ratio of stocks has fallen to levels that raise the risk of at least a mild correction.