Weekly S&P500 ChartStorm - US stockmarket valuations remain dangerously high
Learnings and conclusions from this week’s charts: $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $DJIA(.DJI)$
The S&P500 declined -1.42% in February (still up +1.2% YTD).
Consumer + Wall Street expectations are rolling over off the highs.
The spike in policy uncertainty + bearishness may help the market bounce.
Foreign flows have helped blow a “US Exceptionalism Bubble”.
Despite the selloff, US stockmarket valuations remain dangerously high.
Overall, there’s plenty of short-term indicators (e.g. surge in bearish sentiment) that make it easy for the market to bounce. But a rising body of more longer-term/cyclical bearish evidence looms. It’s a dangerous point in the cycle, with an uncharted policy backdrop, and hence the mood is steadily shifting…
1. Happy New Month…
The S&P500 declined -1.42% on the month (with the equal-weighted S&P500 only dropping -0.77%, while the Nasdaq dropped -2.7%). The index is still up +1.2% YTD, but looking over the monthly closes there is a bit of a pattern emerging of one step forward, one step back as the index transitions from strong bull market to more of a volatile and ranging market.
2. Consumer Expectations
That theme is being echoed in the Conference Board consumer confidence survey, with stockmarket expectations pulling back further (to a 1-year low) from the November peak.
3. Curbing Enthusiasm
That trend in turn is echoed or confirmed in my Euphoriameter indicator, which after reaching an all-time high in November has dropped to a 6-month low; and presents a concerning recuring pattern of sentiment and cycle indicators rolling over from previous strong readings.
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