The dial on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.
Bull/Bear Market
Our Bull/Bear Market indicator has fallen to 40%, with three of the five leading indicators now signaling risk-off:
Heavy truck sales fell to 33.6K units in March, with the 3-month moving average declining more than 15% from its July 2023 high, warning of a recession.
Stock Pricing
Stock pricing eased slightly to 95.09 from a high of the 97.79 percentile six weeks ago. The extreme reading warns that stocks are at risk of a significant drawdown.
Conclusion
We are now in a bear market, with the bull-bear indicator falling to 40%. Stock pricing remains extreme, warning of the risk of a significant drawdown.
Acknowledgments
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- Multpl.com: Shiller PE Ratio
- S&P Global: S&P 500 Sales and Earnings Estimates
- University of Michigan: Survey of Consumers
- Federal Reserve of St Louis: FRED Data
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.
Well done of being well ahead of the curve Colin. This indicator is valuable for putting market pricing and likely direction into perspective.