{"id":63065,"date":"2025-11-15T10:49:24","date_gmt":"2025-11-15T10:49:24","guid":{"rendered":"https:\/\/thepatientinvestor.com\/?p=63065"},"modified":"2025-11-15T10:49:57","modified_gmt":"2025-11-15T10:49:57","slug":"us-extreme-stock-pricing","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2025\/11\/15\/us-extreme-stock-pricing\/","title":{"rendered":"US Extreme Stock Pricing"},"content":{"rendered":"
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\"Bull\/Bear<\/div>\n
\"Stock<\/div>\n<\/div>\n

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<\/strong>. We do not recommend selling stocks because the market valuation is high; however, we recommend exercising caution when adding new positions.<\/p>\n

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

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.<\/p>\n

\"Bull-Bear<\/p>\n

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<\/a> over the last few days warns of a contraction.<\/p>\n

\"Chicago<\/p>\n

Stock Pricing<\/h2>\n

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.<\/p>\n

\"Stock<\/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 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.<\/p>\n

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.<\/p>\n

\"S&P<\/p>\n

Conclusion<\/h2>\n

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

Acknowledgments<\/h4>\n