Profit margins, he says, are mean-reverting, meaning that at times when margins are high, investors should be willing to pay less per dollar of earnings.
It was, however, like the typical expiration week we have grown accustomed to experiencing, with some very short-term trading opportunities for those catching the peaks and valleys but a mean-reverting tendency overall.
The market is fresh off five consecutive up days which, in a mean-reverting market environment, suggests an increased risk of a downside move as technical traders take profits around resistance levels.