Wow. Didn't realize just how overvalued the US market has become. Btw, Howard Marks wrote about US overvaluation days ago too. My favorite point from his memo:
"The last sustained market correction ended in early 2009, meaning it’s been over 16 years since risk bearing was seriously punished and “buying the dips” wasn’t rewarded. That means no one under 35 or so – professional and amateur investors alike – has ever experienced a prolonged bear market. Older investors have experienced one or more, but, with the passage of such a long time, some may have been lulled into a false sense of security."
Yup! There have been a good number of stalling days in recent sessions, which could be reflective of a market top or possible pullback. Watching these indexes feels like watching Nik Wallenda walk the wire without a tether and the wind is starting to pick up! One gust from the wrong direction and...
Just read in equity news, according to the FT: “[MIT] researchers said 95% of organizations are getting zero returns from their investments in generative AI.” The article continued, “The story is spooking people,” said one trader close to a multibillion-dollar fund. Sounds very 1999-ish?
Yeah, and it could be something as simple as that article to start a bit of an unraveling ...if it's all built on confidence and expectations then all it takes is for doubt (or inconvenient facts) to start coming into play
The SP500 vs M2 ratio is a good one. I am only wondering how to cope with the delay of M2 beeing updated only on a monthly basis (while there might be posssibly some weekly updates less smoothed)? The link shows the SPXEW (SP500 equal weight) vs SPX (SP500) ratio: almost impossible to predict, when the gap (highlighted yellow) will lead to a break-down of the SP500. Market-breadth is quite weak. Chart shows also indicators LMACD and RSI. Link Chart: https://www.tradingview.com/x/dfIhfmz4/ One other chart shows the TOP10 charts and the Bollinger band width. Normally it gets contracted before a stronger move (consolidation, then contraction). Link Chart: https://www.tradingview.com/x/h7S7SK0P/
Thanks, yes it is a good question -- data lags are a reality (same with CPI or GDP) that you have to deal with in real time in actual practise, while historical comparisons basically assume real time data availability. One way to get around it is by making projections (e.g. most of the time you can guess the approximate range of the next month's CPI print)
Wow. Didn't realize just how overvalued the US market has become. Btw, Howard Marks wrote about US overvaluation days ago too. My favorite point from his memo:
"The last sustained market correction ended in early 2009, meaning it’s been over 16 years since risk bearing was seriously punished and “buying the dips” wasn’t rewarded. That means no one under 35 or so – professional and amateur investors alike – has ever experienced a prolonged bear market. Older investors have experienced one or more, but, with the passage of such a long time, some may have been lulled into a false sense of security."
excellent comment, yup we are totally in a "new paradigm" -- you see it across the spectrum of market participants.
history in the making
Yup! There have been a good number of stalling days in recent sessions, which could be reflective of a market top or possible pullback. Watching these indexes feels like watching Nik Wallenda walk the wire without a tether and the wind is starting to pick up! One gust from the wrong direction and...
indeed, well said!
Just read in equity news, according to the FT: “[MIT] researchers said 95% of organizations are getting zero returns from their investments in generative AI.” The article continued, “The story is spooking people,” said one trader close to a multibillion-dollar fund. Sounds very 1999-ish?
Yeah, and it could be something as simple as that article to start a bit of an unraveling ...if it's all built on confidence and expectations then all it takes is for doubt (or inconvenient facts) to start coming into play
The SP500 vs M2 ratio is a good one. I am only wondering how to cope with the delay of M2 beeing updated only on a monthly basis (while there might be posssibly some weekly updates less smoothed)? The link shows the SPXEW (SP500 equal weight) vs SPX (SP500) ratio: almost impossible to predict, when the gap (highlighted yellow) will lead to a break-down of the SP500. Market-breadth is quite weak. Chart shows also indicators LMACD and RSI. Link Chart: https://www.tradingview.com/x/dfIhfmz4/ One other chart shows the TOP10 charts and the Bollinger band width. Normally it gets contracted before a stronger move (consolidation, then contraction). Link Chart: https://www.tradingview.com/x/h7S7SK0P/
Thanks, yes it is a good question -- data lags are a reality (same with CPI or GDP) that you have to deal with in real time in actual practise, while historical comparisons basically assume real time data availability. One way to get around it is by making projections (e.g. most of the time you can guess the approximate range of the next month's CPI print)