Author: Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters. Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis. Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events. He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.
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US Market Snapshot

Bull/Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, and the indicator on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because market valuations are high; however, we recommend exercising caution when adding new positions.

Bull/Bear Market

The Bull/Bear indicator remains at 40%, warning of a bear market ahead, with three of five indicators signaling risk-off.

US Bull-Bear Market Indicator

The Chicago Fed National Financial Conditions Index declined to -0.497 on April 17, indicating improving liquidity in financial markets. A rise above -0.40 would signal risk-off, and confirm bear signals from the Fed Funds Rate cycle and the University of Michigan Index of Current Economic Conditions.

Chicago Fed National Financial Conditions Index

Stock Pricing

Stock pricing remains elevated at 95.73% compared to 91.79 percent three weeks ago.

US Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher the stock market price measure is relative to the historical mean, the greater the risk of a sharp drawdown.

The S&P 500 eased to 25.8 times its highest trailing earnings, from a September 2025 peak at 30.1, but is still 49% higher than its long-term average of 17.3.

S&P 500 PE of Highest Trailing Earnings

Conclusion

The bull-bear indicator at 40% warns of a bear market, while extreme pricing increases the risk of a significant drawdown.

Acknowledgments

Notes

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ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% nine weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The ASX 200 Financials Index is retracing to test primary support at 9000. A breach would indicate reversal to a primary downtrend, signaling risk-off.

ASX 200 Financials Index

Stock Pricing

ASX stock pricing declined to 76.24 percent, from 77.79 percent last week. The August 2025 high was 92.23 percent, with an April low of 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

Conclusion

The ASX bull-bear indicator at 56% signals a mild bear market, while stock market pricing remains high, increasing the risk of a drawdown.

Acknowledgments

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Rising Crude is Bearish for Gold

Key Points

  • Brent crude futures (June’26) rose to $103.68 per barrel.
  • The S&P 500 reached a new high. However, the bull signal has not been confirmed by the Dow and the S&P 1500 Transportation Index.
  • The Fed has injected $170 billion of liquidity into financial markets since December 2025.
  • 10-year Treasury yields found support at 4.25%, while gold is headed for another test of support at $4,500 per ounce.

Brent crude futures (June’26) broke resistance at $100 per barrel and are now testing $104.

Brent Crude Futures (ICE June'26)
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Waiting for Godot

Key Points

  • President Trump said he would indefinitely extend the ceasefire with Iran to allow for further peace talks, but the blockade of Iranian ports continues.
  • According to Tasnim, the Iranian negotiating team informed Pakistani mediators that it will not attend talks in Islamabad on Wednesday, and “there is currently no prospect for participating in the negotiations.”
  • The last oil tankers to traverse the Strait of Hormuz before the conflict started are now offloading their cargoes.
  • Global markets face a crude oil shortage of 10 million barrels per day for as long as the Strait of Hormuz remains closed.
  • The IEA coordinated release of 400 million barrels from reserves will last 40 days.
  • China halted purchases and released crude from its extensive reserves to minimize disruption, but is expected to resume purchases in weeks.
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Iran Update

Key Points

  • Iran is considering attending peace talks with the United States in Pakistan, ​a senior Iranian official told Reuters on Monday.
  • The US blockade of Iranian ports remains in place.
  • Iran has closed the Strait of Hormuz and remains a threat to oil pipelines in the region.
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Don’t Chase the Rally

Key Points

  • The S&P 500 index and the Nasdaq QQQ ETF have made new highs at 7126 and 649, respectively, signaling a fresh advance.
  • However, the Strait of Hormuz remains closed.

The S&P 500 broke resistance at 7000, rallying to 7126 on Friday, buoyed by optimism over a resolution to the war with Iran.

S&P 500

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US Market Snapshot

Bull/Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, and the indicator on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because market valuations are high; however, we recommend exercising caution when adding new positions.

Bull/Bear Market

The Bull/Bear indicator remains at 40%, warning of a bear market ahead, with three of five indicators signaling risk-off.

US Bull-Bear Market Indicator

The Chicago Fed National Financial Conditions Index declined to -0.465 on April 10. A rise above -0.40 would signal risk-off, confirming bear signals from Fed monetary policy (rate-cut cycle) and the University of Michigan Index of Current Economic Conditions.

Chicago Fed National Financial Conditions Index

Stock Pricing

Stock pricing continued its sharp rise, reaching 95.97 percent from 91.79 percent two weeks ago.

We replaced the S&P 500 Price-to-Sales ratio and Forward Price-Earnings Ratio with similar series for the Dow Jones Industrial Index, but use a 20% trimmed mean with the new series. The trimmed mean excludes the top 10% and bottom 10% of readings to minimize distortion from outliers in the smaller population of 30 stocks.

US Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher the stock market price measure is relative to the historical mean, the greater the risk of a sharp drawdown.

Robert Shiller’s CAPE compares the S&P 500 to its 10-year average of inflation-adjusted earnings. The ratio rebounded to 39.07, almost 75% above its long-term mean of 22.38.

S&P 500 CAPE
The S&P 500 measured against the highest trailing earnings, increased to 25.7 from 23.7 two weeks ago as stocks rallied, a 49% premium relative to its long-term mean of 17.3.

S&P 500 PE of Highest Trailing Earnings

Conclusion

The bull-bear indicator at 40% warns of a bear market, while extreme pricing highlights the risk of a significant drawdown.

Acknowledgments

Notes

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ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% nine weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

NAB Forward Orders fell to -1 in March, but the 3-month moving average remains at 2.33. Values above zero signal risk-on.

NAB Forward Orders

Stock Pricing

ASX stock pricing declined to 77.79 percent, from 79.17 percent last week. The August 2025 high was 92.23 percent, with an April low of 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

The ASX 20 Price-to-Sales ratio (20% trimmed mean) declined to 4.37 from 4.46 last week, but remains above its long-term average of 4.17.

ASX 20 Price-to-Sales 20% Trimmed Mean

Conclusion

The ASX bull-bear indicator at 56% signals a mild bear market, while stock market pricing remains high, with elevated risk of a drawdown.

Acknowledgments

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More Noise, No Signal

Key Points

  • Following the breakdown of ceasefire talks, President Trump initiated a naval blockade on Monday to pressure Iran to restore access to the Strait of Hormuz.
  • Central Command reported that nine oil tankers from Iran followed orders to turn around since the blockade began.
  • On Wednesday, Iran’s military threatened to block trade through the Red Sea if the United States continues its naval blockade.
  • The White House says the US remains “engaged” in “productive and ongoing” discussion with Iran.
  • President Trump insists the war is “close to over” and  the stock market is “going to boom.”
  • The S&P 500 makes a new high above 7000.
  • Press Secretary Karoline Leavitt says the US “feels good” about the prospect of a deal, but says no date has been set for further negotiations.
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