Is S&P 500 About To Reverse?

The S&P 500 index has recently reached its all time high level, buoyed by US economic optimism (?). http://www.usatoday.com/story/money/markets/2016/08/11/stocks-dow–sp500-thursday-wall-street/88557406/

Overbought signals are clearly present in the MACD indicator.

S&P500.jpeg

Fundamentally, we have seen the current 30 day average trading P/E of 20.17x exceeded the long term historical P/E (since 1998) of 19.43x.

PER.png

In terms of price to book ratio, the current 30 day average trading P/B of 2.83x approximates the long term historical P/B (since 1998) of 2.94x.

PBR.png

The current dividend yield of 2.10% is below that of its long term historical average dividend yield (since 1970) of 2.93% (signifying potential overvaluation).

Div Yield.png

Final Words

Investors should monitor the S&P 500 index closely and trade with caution, as the index appears “overvalued”.

DISCLAIMER: ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES OR INSTRUMENTS MENTIONED ABOVE.

Author: Ken Utau

Data Scientist, Markets Analyst and Food Lover

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