Stocks Overstretched, Dangerous!
Shiller PE Ratio is the price earnings ratio based on average inflation-adjusted earnings from the previous 10 years.
Shiller PE Ratio is above 26.00, which is near 2008 sub-prime bubble levels of around 27.
Its worth mentioning that the historical Median of the ratio is: 15.93
Min: 4.78 (Dec 1920)
Max: 44.20 (Dec 1999) Dotcom bubble
multpl.com/shiller-pe/
That indicates that stocks are extremely vulnerable(expensive), and a continued rise in yields amid FEd withdrawal of liquidity will pull the net below markets, and probably trigger strong bearish pressures on stocks.
Positioning:
Market in a very dangerous position, as complacency at extreme levels, which is clear on the Volatility index VIX, which stands at historical lows near 10. Meantime stocks are on long term overbought territory as indicated by the stocks above 200-days SMA shown on the below indicator.
Margin debt at historical highs, but started finally to retreat, indicating leveraged positions being closed. That also indicates a very vulnerable market, as if these positions start to unwind(forced liquidation) an accelerated sell-off will be the result.
investopedia.com/terms/m/margin_debt.asp
Good luck, find me at twitter.com/thefxchannel
Shiller PE Ratio is above 26.00, which is near 2008 sub-prime bubble levels of around 27.
Its worth mentioning that the historical Median of the ratio is: 15.93
Min: 4.78 (Dec 1920)
Max: 44.20 (Dec 1999) Dotcom bubble
multpl.com/shiller-pe/
That indicates that stocks are extremely vulnerable(expensive), and a continued rise in yields amid FEd withdrawal of liquidity will pull the net below markets, and probably trigger strong bearish pressures on stocks.
Positioning:
Market in a very dangerous position, as complacency at extreme levels, which is clear on the Volatility index VIX, which stands at historical lows near 10. Meantime stocks are on long term overbought territory as indicated by the stocks above 200-days SMA shown on the below indicator.
Margin debt at historical highs, but started finally to retreat, indicating leveraged positions being closed. That also indicates a very vulnerable market, as if these positions start to unwind(forced liquidation) an accelerated sell-off will be the result.
investopedia.com/terms/m/margin_debt.asp
Good luck, find me at twitter.com/thefxchannel
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