{"id":62497,"date":"2025-09-27T01:34:30","date_gmt":"2025-09-27T01:34:30","guid":{"rendered":"https:\/\/thepatientinvestor.com\/?p=62497"},"modified":"2025-09-27T01:34:30","modified_gmt":"2025-09-27T01:34:30","slug":"asx-mildly-bullish-but-extreme-valuation","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2025\/09\/27\/asx-mildly-bullish-but-extreme-valuation\/","title":{"rendered":"ASX mildly bullish but extreme valuation"},"content":{"rendered":"
\n
\"Bull-Bear<\/div>\n
\"Stock<\/div>\n<\/div>\n

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<\/strong>. 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.<\/p>\n

Bull\/Bear Market<\/h2>\n

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

\"ASX<\/p>\n

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.<\/p>\n

The ASX 200 index has been in a bearish decline relative to gold (in Australian dollars) since December 2021.<\/p>\n

\"ASX<\/p>\n

Stock Pricing<\/h2>\n

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.<\/p>\n

\"ASX<\/p>\n

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.<\/p>\n

Conclusion<\/h2>\n

The ASX bull-bear indicator signals a mild bull market. However, the extreme valuation increases the long-term risk of a significant drawdown.<\/p>\n

Acknowledgments<\/h4>\n