Market Top?
Sentiment is too Bullish
- Pros on CNBC are all bullish
- Investors Intelligence Survey shows high bullishness
- VIX is low indicating lack of fear
Valuation Not Cheap
- S&500 Current GAAP P/E is 18 -- above long term average of 14.
- The looming government spending cuts will be a drag on the economy
- Feds easy money policies are keeping interest rates artificially low. It is just a matter of time before the rates start going up. As the rates go up, theearnings yield of the stock market looks less relative to risk-free rates.
Technicals
- SPY is at all time highs and seems to have a reversal day (Mar 6, 2013)
- SPY is at the upper Bollinger Band.
- SPY is considerably above 200 DMA.
- The cyclical bull market has been running for 4 years now and odds are increasing for a correction
SPY vs VIX (High volatility = Market bottom; Low volatility = Market top)
Commentary
April 9, 2013:
Market refuses to correct more than 1 to 2%. Today, major averages made intra-day new high again. Last few months, the rally was led by financials and healthcare stocks. Today, the beaten down technology, metals and mining stocks came to life.
June 12, 2013:
Investor's Business Daily changed "market uptrend under pressure" to "market in correction" (SPY is at $163)