… “There are few times in history when the S&P 500 has been
within 1% or less of its upper Bollinger band (two standard deviations
above the 20-period moving average) on daily, weekly, and monthly resolutions;
coupled with a Shiller P/E in excess of 18 — the present multiple is actually 22.3;
coupled with advisory bullishness above 47% and bearishness below 27% — the actual figures are 51% and 24.5%, respectively;
with the S&P500
at a four-year high, and more than 8% above its 52-week moving average;
and coupled, for good measure, with decelerating market internals, so that the advance-decline line at least deteriorated relative to its 13-week moving average compared with six months prior, or actually broke that average during the preceding month.
This set of conditions is observationally equivalent to a variety of other extreme syndromes of overvalued, overbought, overbullish conditions that we’ve reported over time.
Once that syndrome becomes extreme — as it has here — and you get any sort of meaningful “divergence” (rising interest rates, deteriorating internals, etc.), the result is a virtual “who’s who” of awful times to invest.
Consider the chronicle of these instances in recent decades:
August and December 1972, shortly before a bull market peak that would see the S&P 500 lose half of its value over the next two years;
August 1987, just before the market lost a third of its value over the next 20 weeks;
Read more: http://investmentwatchblog.com/top-economist-hussman-history-is-sending-us-a-serious-warning/#.UFC-cBg00y5
coupled with a Shiller P/E in excess of 18 — the present multiple is actually 22.3;
coupled with advisory bullishness above 47% and bearishness below 27% — the actual figures are 51% and 24.5%, respectively;
with the S&P
and coupled, for good measure, with decelerating market internals, so that the advance-decline line at least deteriorated relative to its 13-week moving average compared with six months prior, or actually broke that average during the preceding month.
This set of conditions is observationally equivalent to a variety of other extreme syndromes of overvalued, overbought, overbullish conditions that we’ve reported over time.
Once that syndrome becomes extreme — as it has here — and you get any sort of meaningful “divergence” (rising interest rates, deteriorating internals, etc.), the result is a virtual “who’s who” of awful times to invest.
Consider the chronicle of these instances in recent decades:
August and December 1972, shortly before a bull market peak that would see the S&P 500 lose half of its value over the next two years;
August 1987, just before the market lost a third of its value over the next 20 weeks;
Read more: http://investmentwatchblog.com/top-economist-hussman-history-is-sending-us-a-serious-warning/#.UFC-cBg00y5
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