ASX Market Leading Indicators

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

The ASX Bull-Bear Market indicator declined to 54%, from 64% last week, slipping toward a bear market. Three of six indicators from Australia and China signal risk-off, with a combined weighting of 60% in the ASX Bull-Bear Index, while the US Bull-Bear Index makes up the remaining 40%.

ASX Bull-Bear Market Indicator

The three-month moving average of private dwelling approvals in Australia crossed below its 20-year MA signal line, switching to risk-off.

Australian Private Dwelling Approvals

Stock Pricing

ASX stock pricing increased to a new high of 86.58 percent, from a low of 67.85 percent twelve weeks ago. Stock pricing is now considered extreme.

ASX Stock Market Value Indicator

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

Conclusion

The ASX is now in a mild bear market, while the extreme valuation increases the risk of a significant drawdown.

Acknowledgments

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