Tag: ASX Stock Market Value Indicator

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ASX Improves to Mild Bull Market

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 because market valuation is high, but advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator improved to 66%, from 56% over the last four weeks. Three of four indicators from Australia and two for China now indicate a risk-on stance, with a combined 60% weighting, while the US Bull/Bear indicator, with a 40% weighting, is 60% risk-off.

ASX Bull-Bear Market Indicator

NAB forward orders jumped to +3 in October, raising the 3-month moving average above the zero signal line to signal risk-on.

NAB Forward Orders

The improvement in forward orders was led by a jump in the mining sector.

NAB Forward Orders - by Industry

Stock Pricing

ASX stock pricing declined to 84.01 percent, from a high of 92.23 percent in August, compared to a low of 67.85 percent in April.

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 of 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.

ASX market capitalization increased to 1.2 times GDP, the highest since 2021.

ASX Market Cap/GDP

Earlier peaks are attributable to the resources sector, with ASX market cap almost doubling during the boom from 2004 to 2007. Both earlier peaks were followed by a steep rise in iron ore prices (marked in red below).

Iron Ore Booms

But this time is different. Iron ore prices are falling.

Conclusion

The ASX bull-bear indicator has improved to a mild bull market, but valuation is falling after reaching a new extreme, and the risk of a significant drawdown is high.

Acknowledgments

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ASX Stock Pricing Falls

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 indicator on the right reflects the current stock market valuation. Stock market pricing indicates whether stocks are cheap or expensive relative to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because the market valuation is high. Still, we advise investors to exercise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, down from 66% four weeks ago. Four indicators from Australia and China indicate a risk-on stance, with a 60% weighting, while the US Bull/Bear indicator, with a 40% weighting, is 60% risk-off.

ASX Bull-Bear Market Indicator

The OECD composite leading indicator for China strengthened to 99.59 from 99.52 in September—values below 99.0 signal risk-off.

OECD Composite Leading Indicator

September Australian building approvals rebounded to 16.8K, with the 3-month moving average holding above the 20-year average—values below the long-term moving average signal risk-off.

Australian Building Approvals

Stock Pricing

ASX stock pricing declined to 86.44 percent from 88.70 percent last week, compared to a high of 92.23 percent in August and a low of 67.85 percent in April.

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 of 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 bull-bear indicator reflects a mild bear market, while the extreme valuation increases the long-term risk of a significant drawdown.

Acknowledgments

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ASX Leading Indicators

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the indicator on the right reflects stock market valuation. Stock market pricing indicates whether stocks are cheap or expensive relative to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because the market valuation is high. Still, we advise investors to be circumspect about adding new positions without carefully investigating the underlying value.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, down from 66% three weeks ago. Four indicators from Australia and China indicate risk-on, with a 60% weighting, while the US Bull/Bear indicator has a 40% weighting.

ASX Bull-Bear Market Indicator

China’s NBS Manufacturing PMI fell sharply from 49.8 in September to 49.0 in October. A PMI below 49.0 signals risk-off.

NBS China Manufacturing PMI

September Australian building approvals will be released on Monday, where the 3-month moving average was close to a risk-off signal in August.

Australian Building Approvals

Stock Pricing

ASX stock pricing declined to 88.70 percent, compared to a high of 92.23 percent in August and a low of 67.85 percent in April.

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 bull-bear indicator reflects a mild bear market, while extreme valuation increases the long-term risk of a significant drawdown.

Acknowledgments

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ASX extreme pricing continues

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the indicator on the right reflects stock market valuation. Stock market pricing indicates whether stocks are cheap or expensive relative to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because the market valuation is high. Still, we advise investors to be circumspect about adding new positions without carefully investigating the underlying value.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% two weeks ago. Four indicators from Australia and China indicate risk-on, with a 60% weighting, while the US Bull/Bear indicator has a 40% weighting.

ASX Bull-Bear Market Indicator

The ASX 200 index has been in a downtrend relative to gold (measured in AUD) for four years, and shows no sign of changing.

ASX 200/ Gold in AUD

Stock Pricing

ASX stock pricing increased to 90.09 percent, compared to a high of 92.23 percent in August and a low of 67.85 percent in April.

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 bull-bear indicator reflects a mild bear market, while extreme valuation increases the long-term risk of a significant drawdown.

Acknowledgments

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ASX Swings to Bear

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the indicator on the right reflects stock market valuation. Stock market pricing indicates whether stocks are cheap or expensive relative to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because the market valuation is high. Still, we advise investors to be circumspect about adding new positions without carefully investigating the underlying value.

Bull/Bear Market

The ASX Bull-Bear Market indicator retreated to 56%, from 66% last week, shifting to a mild bear market.

ASX Bull-Bear Market Indicator

The 3-month moving average of the NAB forward orders index fell below zero in September, signaling risk-off.

NAB Forward Orders & 3-Month MA

Four indicators from Australia and China now indicate risk-on, with a 60% weighting, while the US Bull/Bear indicator, with a 40% weighting, is unchanged.

Stock Pricing

ASX stock pricing eased slightly, to 89.75 percent, compared to a high of 92.23 percent in August and a low of 67.85 percent in April.

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 bull-bear indicator has shifted to a mild bear market, while the extreme valuation increases the long-term risk of a significant drawdown.

Acknowledgments

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ASX Leading Indicator and Stock Pricing

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the indicator on the right reflects stock market valuation. Stock market pricing indicates whether stocks are cheap or expensive relative to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because the market valuation is high. Still, we advise investors to be circumspect about adding new positions without carefully investigating the underlying value.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 66%, compared to 56% six weeks ago, signaling a mild bull market.

ASX Bull-Bear Market Indicator

Five indicators from Australia and China indicate risk-on, while the ASX 200 relative to Gold (in AUD) remains risk-off. The composite index includes a 40% weighting for the US Bull/Bear indicator, which is also unchanged.

The OECD Composite Leading Indicator for China remains at a low 99.36 points for September, largely unchanged from 99.35 in August. Readings below 99 signal risk-off.

China: OECD Leading Indicator

Stock Pricing

ASX stock pricing eased to 89.79 percent, compared to a high of 92.23 percent in August and a low of 67.85 percent in April.

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 bull-bear indicator signals a mild bull market. However, the extreme valuation increases the long-term risk of a significant drawdown.

Acknowledgments

Posted on

ASX Leading Indicator and Stock Pricing

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the indicator on the right reflects stock market valuation. Stock market pricing indicates whether stocks are cheap or expensive relative to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because the market valuation is high. Still, we advise investors to be circumspect about adding new positions without carefully investigating the underlying value.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 66%, compared to 56% five weeks ago, signaling a mild bull market.

ASX Bull-Bear Market Indicator

Five indicators from Australia and China indicate risk-on, while the ASX 200 relative to Gold (in AUD) remains risk-off. The composite index includes a 40% weighting for the US Bull/Bear indicator, which is also unchanged.

Australian private dwelling approvals declined to 14.1K in August, but the 3-month moving average remains at 15.3K. A cross below the 20-year moving average (15.1K) would signal risk-off.

Australian Private Dwelling Approvals

China’s NBS manufacturing PMI improved to 49.8 points for September. The last reading below the 49.0 risk-off signal line was in May 2023.

China: NBS Manufacturing PMI

Stock Pricing

ASX stock pricing increased to 90.10 percent, compared to a high of 92.23 percent in August and a low of 67.85 percent in April.

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 bull-bear indicator signals a mild bull market. However, the extreme valuation increases the long-term risk of a significant drawdown.

Acknowledgments

Posted on

ASX mildly bullish but extreme valuation

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the gauge on the right reflects stock market valuation. Stock market pricing indicates whether stocks are cheap or expensive relative to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because the market valuation is high, but we would advise investors to be circumspect about adding new positions without careful investigation of the underlying value.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 66%, compared to 56% four weeks ago, signaling a mild bull market.

ASX Bull-Bear Market Indicator

Five of six indicators from Australia and China indicate risk-on, while the ASX 200 relative to Gold (in AUD) remains risk-off. The composite index includes a 40% weighting for the US Bull/Bear indicator, which is also unchanged.

The ASX 200 index has been in a bearish decline relative to gold (in Australian dollars) since December 2021.

ASX 200 Index/Gold in AUD

Stock Pricing

ASX stock pricing retreated to 89.20 percent, compared to a high of 92.23 percent six weeks ago and a low of 67.85 percent in April.

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 bull-bear indicator signals a mild bull market. However, the extreme valuation increases the long-term risk of a significant drawdown.

Acknowledgments

Posted on

ASX Stock Pricing still Extreme

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the gauge on the right reflects stock market valuation. Stock market pricing indicates whether stocks are cheap or expensive relative to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because the market valuation is high, but we would advise investors to be circumspect about adding new positions without careful investigation of the underlying value.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 66%, compared to 56% two weeks ago, signaling a mild bull market.

ASX Bull-Bear Market Indicator

Five of six indicators from Australia and China indicate risk-on, while the ASX 200 relative to Gold (in AUD) remains risk-off. The composite index includes a 40% weighting for the US Bull/Bear indicator, which is also unchanged.

The ASX 200 index has been in a bearish decline relative to gold (in Australian dollars) since December 2021.

ASX 200 Index/Gold in AUD

Stock Pricing

ASX stock pricing retreated to 90.42 percent, compared to a high of 92.23 percent five weeks ago and a low of 67.85 percent in April.

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.

The 20% trimmed mean of ASX 20 forward price-earnings ratios has climbed to an extreme 23.15.

20% Trimmed Mean of ASX 20 Forward PE's

Conclusion

The ASX bull-bear indicator signals a mild bull market. However, extreme valuations increase the long-term risk of a significant drawdown.

Acknowledgments

Posted on

Forward Orders Lift ASX to Mild Bull Signal

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the gauge on the right reflects stock market valuation. Stock market pricing indicates whether stocks are cheap or expensive relative to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks because the market valuation is high, but we would advise investors to be circumspect about adding new positions without careful investigation of the underlying value.

Bull/Bear Market

The ASX Bull-Bear Market indicator jumped to 66%, compared to 56% last week, with NAB forward orders crossing to a risk-on signal.

ASX Bull-Bear Market Indicator

Five of six indicators from Australia and China now indicate risk-on, while the ASX 200 relative to Gold (in AUD) remains risk-off. The index includes a 40% weighting for the US Bull/Bear indicator, which is unchanged.

NAB forward orders for Australia increased to 1.0 in August from 0 in the preceding two months, lifting the 3-month moving average above zero and signaling risk-on for the first time since October 2023.

Australia: NAB Forward Orders & 3-Month MA

Stock Pricing

ASX stock pricing increased to 91.37 percent, compared to a high of 92.23 percent four weeks ago and a low of 67.85 percent in April.

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.

The All Ordinaries dividend yield fell to 3.12%, a level typical of recessions like 1987 and 2020, when falling earnings force dividend cuts. Dividends are reasonably healthy at present, suggesting that valuations are extreme.

All Ordinaries Dividend Yield

Conclusion

The ASX bull-bear indicator has lifted to 66%, signaling a mild bull market. However, extreme valuations increase the long-term risk of a significant drawdown.

Acknowledgments

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