Tag: Stock Market Pricing Indicator

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US Market Snapshot

Bull-Bear Market Index
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

We have revised the bull-bear market leading indicator to improve its responsiveness, stripping it down to a composite of five key indicators. At present, two of five indicators signal risk-off, indicating medium risk of a US bear market.

Bull/Bear Market Indicator

Freight Transport Activity

The plunging Cass Freight Shipments Index warns of contracting economic activity, signaling risk-off. The index highlights broad freight shipping levels in the mainstream economy, and a rise or fall of more than 3 basis points signals risk-on or risk-off, respectively.

Cass Freight Shipments Index

Stock Pricing

US stock pricing increased to 96.66% from 96.17% last week, against a recent low of 91.79% seven 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.

Buffett Indicator

Warren Buffett's favorite long-term measure of stock market valuation compares stock market capitalization to GDP, providing a stable, long-term ratio unaffected by fluctuating profit margins. The ratio reached a new high of 3.19, more than double its long-term average of 1.2. Buffett Indicator: Stock Market Capitalization to GDP

Dow Jones Industrials Price-to-Sales

The Price-to-Sales ratio for the Dow Jones Industrial Average has reached a new high of 4.20. We use a 20% trimmed mean of the Price-to-Sales ratio for the 30 stocks in the Dow to remove the most extreme readings that would otherwise distort the ratio. Dow Jones Industrials Price-to-Sales Ratio

Shiller CAPE

Robert Shiller's CAPE compares the S&P 500 index to its 10-year average of inflation-adjusted earnings, smoothing business-cycle distortions. The CAPE ratio increased to 40.75, the second-highest peak in history, behind the Dotcom bubble in 2000, and far above its long-term average of 22.4. Robert Shiller's S&P 500 CAPE Ratio

Conclusion

The Bull-Bear indicator suggests the US economy is slowing, but is not yet in a recession.

Extreme pricing, however, elevates the risk of a significant drawdown.

Acknowledgments

Managing Risk

To find out more, go to Managing Risk on the top menu, or see:

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ASX Market Snapshot

Bull-Bear Market Leading Index
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 Leading Index remains at 64, indicating a slowing bull market. One of four Australian indicators and one of two Chinese indicators signal risk-off. However, NAB Forward Orders and the ASX 200 Financials Index are falling sharply, so we are on bear watch. The improvement in recent weeks was due to changes to composite indicators for the US Leading Index, which enjoys a 40% weighting in the ASX Index.

ASX Bull/Bear Market Indicator

Financial Sector

The ASX 200 Financials Index (XFJ) remains below its 50-week weighted moving average, but respected primary support at 9000. A breach of 9000 would indicate a primary downtrend, signaling risk-off, but the signal remains risk-on for the present.

ASX 200 Financials Index

Financial sector performance reflects confidence in the broader economy, particularly in the housing sector.

NAB Forward Orders

NAB Forward Orders fell sharply, to -5 in April 2026, from -1 in March, while the 3-month moving average dropped to zero. Any further decline will signal risk-off.

NAB Forward Orders

Stock Pricing

ASX stock pricing bounced to 76.43 percent from 75.44 percent last week. Our highest reading was 92.23 percent in August 2025, with a low of 67.85 percent in April 2025. 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 Bull-Bear indicator suggests that the Australian economy is slowing. Two more indicators have fallen sharply. While they do not yet signal risk-off, we are on bear alert.

On the other hand, valuations remain high, increasing the risk of a drawdown.

Acknowledgments

Managing Risk

To find out more, go to Managing Risk on the top menu, or see:

Posted on

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 stock market valuation. 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.

Bull-Bear Market Indicator

Heavy truck sales were revised down to 25,500 units in November, with the 12-month MA falling to 35,200. Declining truck sales are now at recession levels, indicating that economic growth is slowing.

Heavy Truck Sales (Units)

Stock Pricing

Stock pricing increased to 98.57 percent, close to its October high of 98.66, and above the low of 95.04 percent in April. The extreme pricing warns that stocks are at risk of a significant drawdown.

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.

Warren Buffett’s favorite stock market valuation metric compares market capitalization to nominal GDP. The ratio has reached a record high of 2.99 compared to a 50-year average of 1.18, indicating that stock market pricing is extreme.

Stock Market Capitalization/GDP

Robert Shiller’s CAPE ratio compares the S&P 500 index to a 10-year average of inflation-adjusted earnings. The current value of 40.1 is the highest outside of the 1999-2000 Dotcom bubble.

Robert Shiller's CAPE Ratio

Conclusion

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

Acknowledgments

Notes

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US Bear Market & Extreme Pricing

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 one on the right reflects the current stock market valuation levels. 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 the market valuation is high; however, we recommend exercising caution when adding new positions.

Bull/Bear Market

The Bull/Bear indicator remains at 40%, signaling a bear market ahead. We have received updates for two of the three market indicators that were delayed by the US government shutdown, but are still waiting on an update for heavy truck sales (marked in orange below).

Bull-Bear Market Indicator

The Chicago Fed National Financial Conditions Index eased to -0.538 on November 14, indicating loose monetary conditions that support high stock prices.

Chicago Fed National Financial Conditions Index

However, a steep plunge in Bitcoin over the last few days warns of a liquidity contraction that will likely show up in financial conditions in the next few weeks.

Bitcoin (BTC)

Continued unemployment claims increased to almost 2 million, while the unemployment rate rose to 4.4%, both reflecting a slowly deteriorating labor market.

Continued Claims & Unemployment Rate

Of greater concern is the loss of 100 thousand jobs in cyclical sectors since February. A fall of 300 thousand from the February high would signal risk-off. Employment in manufacturing, construction, and transport and warehousing accounts for sizable job losses during a recession, which typically triggers an economic contraction.

Jobs in Cyclical Industries

Stock Pricing

Stock pricing decreased slightly to 98.15 percent, compared to a high of 98.66 percent in late October and an April low of 95.04 percent. The extreme pricing warns that stocks are at risk of a significant drawdown.

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.

The S&P 500 climbed to a record high of 3.28 times sales, compared to its long-term average of 1.8 times sales, an 82% premium.

S&P 500 Price-to-Sales

Conclusion

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

Acknowledgments

Notes

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US Extreme Stock Pricing

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 one on the right reflects the current stock market valuation levels. 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 the market valuation is high; however, we recommend exercising caution when adding new positions.

Bull/Bear Market

The Bull/Bear indicator remains at 40%, signaling a potential bear market ahead. Updates to three market indicators (highlighted in orange below) are delayed because of the US government shutdown. The first BLS release of delayed data is scheduled for Thursday, November 20.

Bull-Bear Market Indicator

The Chicago Fed National Financial Conditions Index eased to -0.5349 on November 7, indicating loose monetary conditions that support high stock prices. However, a sharp decline in Bitcoin over the last few days warns of a contraction.

Chicago Fed National Financial Conditions Index

Stock Pricing

Stock pricing increased slightly to 98.37 percent, compared to a high of 98.66 percent in late October and an April low of 95.04 percent. The extreme pricing warns that stocks are at risk of a significant drawdown.

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.

A forward PE of 24.8 indicates the S&P 500 is trading at more than a 50 percent premium to its long-term average of 16.1 times projected earnings.

S&P 500 Forward PE

Conclusion

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

Acknowledgments

Notes

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Record Lows and Highs spell trouble in the USA

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 one on the right reflects the current stock market valuation levels. 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 Bull/Bear indicator remains at 40%, warning of a bear market ahead. Updates to three market indicators (highlighted in orange below) are delayed because of the US government shutdown.

Bull-Bear Market Indicator

Another indicator, the University of Michigan index of current economic conditions, plunged to 52.3, the lowest reading since the series began in 1960. The low reading would typically signal a recession, but has not yet been confirmed by either tighter financial conditions or a fall in the S&P 500.

University of Michigan Current Economic Conditions

The Chicago Fed National Financial Conditions Index turned up to -0.515 but continues to signal loose monetary conditions, which support high stock prices.

Chicago Fed National Financial Conditions Index

The S&P 500 has not experienced a significant correction since April, and the 30-week Smoothed Momentum indicator continues to oscillate above zero.

S&P 500 30-Week Twiggs Momentum Smoothed

Stock Pricing

Stock pricing eased slightly, to 98.32 percent from a new high of 98.66 percent last week, and an April low of 95.04 percent. The extreme reading warns that stocks are at risk of a significant drawdown.

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.

The S&P 500 reached a new high of 3.28 times sales, compared to a long-term average of 1.80 times.

S&P 500 Price-to-Sales

Conclusion

A record-low current economic conditions index and a record-high price-to-sales ratio for the S&P 500 both warn of instability ahead. Stock prices are supported by loose monetary conditions, but cannot hide the underlying economic fragility.

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

Acknowledgments

Notes

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US Stock Pricing at New High

Bull/Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, and the one on the right reflects stock market valuation levels. 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 would advise investors to be circumspect about adding new positions without carefully investigating the underlying value.

Bull/Bear Market

The Bull/Bear indicator remains at 40%, warning of a bear market ahead. Updates to three market indicators (highlighted in orange below) are delayed because of the US government shutdown.

Bull-Bear Market Indicator

The Philadelphia Fed Coincident Economic Activity Index deserves mention in the absence of updates for some of our regular indicators. A decline below 2.5% typically only occurs several months ahead of a recession.

Coincident Economic Activity Index
The Chicago Fed National Financial Conditions Index continues to signal loose monetary conditions, supporting high stock prices.

Chicago Fed National Financial Conditions Index

However, a decline in bank reserves below $3.0 trillion warns that repo markets are tightening.

Commercial Bank Reserves

And Bitcoin continues to test support at 110K, warning of tighter liquidity.

Bitcoin (BTC)

Stock Pricing

Stock pricing increased to a new high of 98.66 percent, compared to an April low of 95.04 percent. The extreme reading warns that stocks are at risk of a significant drawdown.

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.

Robert Shiller’s CAPE index climbed above 40 for the first time ever outside of the Dotcom bubble. CAPE compares the S&P 500 index to a ten-year average of inflation-adjusted earnings.

S&P 500 CAPE

Conclusion

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

Acknowledgments

Notes

Posted on

US stock pricing at new high

Bull/Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, and the one on the right reflects stock market valuation levels. 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 would advise investors to be circumspect about adding new positions without carefully investigating the underlying value.

Bull/Bear Market

The Bull/Bear indicator remains at 40%, warning of a bear market ahead. Updates to three market indicators (highlighted in orange) are delayed because of the US government shutdown.

Bull-Bear Market Indicator

The University of Michigan consumer survey indicates that perceptions of current economic conditions dropped to 58.6, the lowest level in more than three years. Readings below 100 signal risk-off, but the Chicago Fed National Financial Conditions Index or 30-week Smoothed Momentum for the S&P 500 still needs to confirm this.

University of Michigan: Current Economic Conditions

Stock Pricing

Stock pricing increased to a new high of 98.59 percent, compared to an April low of 95.04 percent. The extreme reading warns that stocks are at long-term risk of a significant drawdown.

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 Price-Earnings ratio of highest trailing earnings eased slightly to 29.3, but remains extreme compared to the fifty-year average of 16.3.

S&P 500 PE of Highest Trailing Earnings

Conclusion

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

Acknowledgments

Notes

Posted on

US Stock Pricing at Extreme

Bull/Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, and the one on the right reflects stock market valuation levels. 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 would advise investors to be circumspect about adding new positions without carefully investigating the underlying value.

Bull/Bear Market

The Bull/Bear indicator remains at 40%, warning of a bear market ahead.

Bull-Bear Market Indicator

Updates to three market indicators (highlighted in orange) are delayed because of the US government shutdown.

The Chicago Fed National Index of Financial Conditions dropped to -0.559 on October 10, indicating a return to pandemic-era loose monetary conditions. NFCI values above zero indicate monetary tightening, while values below signal loose financial conditions.

Chicago Fed National Financial Conditions Index

Stock Pricing

Stock pricing increased to 98.45 percent, compared to a high of 98.56 percent two weeks ago, and an April low of 95.04 percent. The extreme reading warns that stocks are at long-term risk of a significant drawdown.

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.

Robert Shiller’s CAPE measure reached 39.20 this week, the highest ever recorded outside of the Dotcom bubble in 1999-2000.

S&P 500 CAPE

CAPE compares the S&P 500 index to a 10-year average of inflation-adjusted earnings.

Conclusion

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

Acknowledgments

Notes

Posted on

US Stock Pricing Remains Elevated

Bull/Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, and the one on the right reflects stock market valuation levels. 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 would advise investors to be circumspect about adding new positions without carefully investigating the underlying value.

Bull/Bear Market

The Bull/Bear indicator remains at 40%, warning of a bear market ahead.

Bull-Bear Market Indicator

Updates to three market indicators (highlighted in orange) are delayed because of the US government shutdown.
The University of Michigan consumer survey reports the 3-month average of current economic conditions declined to a low 61.0 points, warning of a recession.

University of Michigan: Current Economic Conditions

However, the S&P 500 remains elevated, and the Chicago Fed National Index of Financial Conditions was a low -0.546 on October 3, indicating a resilient economy with strong liquidity.

Chicago Fed National Financial Conditions Index

Stock Pricing

Stock pricing eased to 98.26 percent, compared to a high of 98.56 percent last week, and an April low of 95.04 percent. The extreme reading warns that stocks are at long-term risk of a significant drawdown.

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 S&P 500 rose to a new record of 3.33 times sales in September, compared to a long-term average of 1.8 times.

S&P 500 Price-to-Sales

Conclusion

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

Acknowledgments

Notes

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