9/12/2018 – Another mixed day with the Dow Jones up 27 points (+0.11%) and the Nasdaq down 18 points (-0.23%)
If you would like to find out what the stock market will do next, in both price and time, based on our timing and mathematical work, please Click Here
Now, let’s look at some scary charts……
We have argued for some time, based on numerous metrics, that today’s stock market is selling at its highest valuation level in history. Yes, going all the way back to May of 1790. The chart above presents us with yet another confirmation point of the same.
Having said that, you can nail this chart to a bull’s head and they will still argue that today’s market is undervalued and that FAANG stocks represent a wonderful buying opportunity. Any more scary charts? I am glad you have asked.
In other words, while just TECH stocks were massively overpriced at 2000 top, today it is EVERYTHING BUBBLE. Perhaps that is the reason Warren Buffett is sitting on a massive cash pile while the rest of value investors are chasing “undervalued unicorns”. And if that wasn’t enough, there is this comparison……
We often talk about investor sentiment and how oversold/overbought the market is. And while no indicator is perfect, perhaps nothing tracks actual investor bullish/bearish sentiment better than the actual money, on the margin.
BLINKING RED BUBBLE LIGHT: Stock Market Investor Margin Debt Reaches New High
The world is standing at the edge of the financial abyss while most investors are entirely in the dark. However, specific indicators suggest the market is one giant RED BLINKING LIGHT. One of these indicators is the amount of margin debt held by investors. What is quite surprising about the level of investor margin debt is that it has hit a new record high even though the market has sold off 2,500 points from its peak in February.
It seems as if investors no longer believe in market cycles or fundamentals. Instead, the Wall Street saying that “This time is different” has become permanently ingrained in the market psychology. For example, it doesn’t seem to matter to the market that Amazon makes no money on its massive online retail business. The only segment of Amazon’s business that made a decent profit last quarter was from its Cloud hosting services.
We have touched on this subject matter a few days ago. Some Scary Charts To Keep You Up At Night Over The Weekend. At that time we looked at this chart.
It is truly mind boggling to see how long and leveraged everyone is. When the market finally cracks, as it surely will, all of the red on the right hand side will act as jet fuel to the downside.
Now, you don’t have to rely on the charts above to figure out what the stock market will do next. We have the exact answer you are looking for. If you would like to find out what the stock market will do next, in both price and time, based on our mathematical and timing work, please Click Here.
