{"id":64408,"date":"2026-05-09T13:42:31","date_gmt":"2026-05-09T13:42:31","guid":{"rendered":"https:\/\/thepatientinvestor.com\/?p=64408"},"modified":"2026-05-09T13:56:48","modified_gmt":"2026-05-09T13:56:48","slug":"us-market-snapshot-22","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2026\/05\/09\/us-market-snapshot-22\/","title":{"rendered":"US Market Snapshot"},"content":{"rendered":"
\n
\"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 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<\/strong>. We do not recommend selling stocks because market valuations are high; however, we recommend exercising caution when adding new positions.<\/p>\n

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

The yield curve bear signal has now lapsed, and we have taken the opportunity to revise the bull-bear market leading indicator to improve its responsiveness. The Bull-Bear Leading Index is now stripped down to a composite of five separate indicators, which collectively signal a mild bear market:<\/p>\n

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

Employment in Cyclical Sectors<\/h3>\n

Employment in cyclical sectors \u2014 Manufacturing, Construction, and Transportation & Warehousing \u2014 typically accounts for the majority of job losses during a recession. Rises or falls in employment across these sectors are a leading indicator of the economy. A decline of more than 300K would signal risk-off, while a rise of 500K from the last trough would signal risk-on. Employment declined by 264K from its preceding peak of 27.671 million in September 2024, reaching 27.407 million in December 2025, but has since recovered to 27.501 million.<\/p>\n

\"Employment<\/p>\n

Stock Pricing<\/h2>\n

US stock pricing increased to 95.96% from 95.09% last week, compared to a recent low of 91.79% five weeks ago.<\/p>\n

\"US<\/p>\n

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.<\/p>\n

Buffett Indicator<\/h3>\n

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 3.16 this week, more than double its long-term average of 1.2.<\/p>\n

\"Buffett<\/p>\n

Dow Jones Industrials Price-to-Sales<\/h3>\n

The Price-to-Sales ratio for the Dow Jones Industrial Average has reached a new high of 4.09. 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.<\/p>\n

\"Dow<\/p>\n

Conclusion<\/h2>\n

The bull-bear indicator at 60% suggests the US economy is slowing, but is not yet in a recession. Extreme pricing, however, elevates the risk of a significant drawdown.<\/p>\n

Acknowledgments<\/h4>\n