1/24/2019 – A mixed day with the Dow Jones down 22 points (-0.08%) and the Nasdaq up 47 points (+0.68%)
As we have been saying, the stock market remains at an incredibly important juncture. Things are about to accelerate in an unexpected way. If you would like to find out what happens next, based on our timing and mathematical work, in both price and time, please Click Here.
Real Investment Advice had a great write up and a number of excellent charts on the subject matter. We highly encourage you to read it in full Charts Both Bulls & Bears Should Consider
Let’s very quickly take a look at just two charts…….
The chart shows extreme overvaluation levels usually seen at important generational market tops such as 1929, 1937, 1964 and 2000. This is nothing new to the followers of this blog as we have been arguing the same with the help of Shiller’s Adjusted S&P P/E Ratio. Recall, that ratio was at its record high (if adjusted for 2000 top distortions) just a few short months ago.
Still, the disconnect gets even worse, a lot worse.
This is the real issue we are dealing with here. For instance, today’s earnings are 40% above 2007 top levels (another bubble top), yet the S&P valuations have doubled since then. That is to say, the disconnect has doubled from pre-financial crisis bubble top.
As the chart above suggests, revision to the mean would entail a 50% haircut for the indices. And we are not even bringing up a massive Earnings Recession anticipated over the next few years. After all, most of today’s earnings are still driven by flood of speculative capital perpetuated by QE and artificially low interest rates.
The real question here is whether or not the stock market will correct the imbalances above or perhaps the FED did, indeed, managed to create a Goldilocks Paradise.
Luckily, you don’t have to guess. 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
Please Note: Our latest call was a direct hit. While everyone was panicking our work projected an important bottom on December 27th (+/- 1 trading day) on the Dow at 21,725 (+/- 50 points). An actual bottom was put in place on December 26th at 21,713.
