5/11/2016 – A negative day with the Dow Jones down 216 points (-1.20%) and the Nasdaq down 49 points (-1.02%)
Let’s get straight to the point.
Chart #1: Inflation Adjusted S&P. Despite all of the hoopla about all time highs, the Dow/S&P are sitting at double tops achieved in early 2000. Over 16 years ago. Inflation adjusted that is. The Nasdaq is still down 20%. You would have been the smartest person in the room if you bought 20-30 year Treasury in 2000 yielding 4.5%.
Chart #2: Shiller’s Adjusted S&P P/E ratio. Shows the stock market that is selling at the third highest valuation level in history. Right behind 1929 and 2000 tops and on par with 2007 top. Do I really have to remind you what had happened shortly after those valuation peaks reversed?
Where am I going with this?
I will let John Hussman tell you.
John Hussman: Expensive Stocks Will Lead to Losses, Paltry Returns
“From present valuations, a market loss of that magnitude would not be a worst-case scenario, but merely a run-of-the-mill completion of the current market cycle. Since the dividend yield on the S&P 500 exceeds 2 percent here, that also implies that we fully expect the S&P 500 Index to trade at a lower level in 10-12 years than it does today.”
Most bulls are extremely happy with what Janet Yellen and the FED where able to accomplish over the last few weeks. Particularly, Why Short Sellers Should Send Janet Yellen a “Thank You” Card
Well, they shouldn’t be. All they have done is set up a massive “bull trap” in what is otherwise the last stage of a secular bear market that started in 2000. And considering valuation/earnings imbalances we are witnessing today, long side investors might be in for a beating of a lifetime.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. May 11th, 2016 InvestWithAlex.com
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