The Yield Curve Valuation Indicator
The Yield Curve Model: Very High Risk Chart shows spread between 10-year and 3-mo Treasury debt relative to # of standard deviations from historical norm. Recession periods are shaded. Summary:When short term (3-month) Treasury yields are higher than long term (10-year) yields, it is a bearish signal that is almost always followed by economic recession.
Billionaire Buffet Value Indicator
The Buffett Indicator Model: Overvalued Chart shows current Buffett Indicator value as # of standard deviations above/below historic average. Recession periods are shaded. Summary: The Buffett Indicator is the ratio of the total value of the US stock market versus the most current measure of total GDP. When this value is very high it suggests […]
US Coincident Indicator
The State Coincidence Index Model: Normal Chart shows # of US states with shrinking coincidence indicator scores. Recession periods are shaded. Summary:A State Coincidence Index (SCI) is an aggregate measure of individual state economic health. This model charts the number of states with month-over-month declines in their SCI. On average, if more than 25 states […]
S&P500 Mean Reversion Indicator
S&P500 Mean Reversion Model: Overvalued Chart shows S&P500 as # of standard deviations above/below its historic trendline value. Recession periods are shaded. Summary:An extremely straightforward model stipulating that at some point, eventually, the S&P500 will tend to return towards its historic trend line.
Margin Debt Model Indicator
The Margin Debt Model: Neutral Chart shows margin debt levels as % of total market value, expressed as amount of standard deviations from historical norm. Recession periods are shaded. Summary:Margin debt is money investors borrow to invest in stocks. High margin debt indicates bullish investors, and tends to lead stock market corrections, particularly after margin […]
Price to Earnings Valuation Indicator
The Price/Earnings Model: Overvalued Chart shows current CAPE value as # of standard deviations above/below historic average. Recession periods are shaded. Summary:The PE Ratio Model tracks the ratio of the total price of the US stock market versus the total average earnings of the market over the prior 10 years (aka the Cyclicly Adjusted PE […]
Junk Bond Spread Valuation Indicator
Junk Bond Spread Model: Neutral Chart shows historical spread between junk bonds and Treasury bonds. Note the inverted y-axis in order to align with theme of “high” values corresponding to aggressive market position. Recession periods are shaded. Summary:Margin debt is money investors borrow to invest in stocks. High margin debt indicates bullish investors, and tends […]
Interest Rate Valuation Indicator
The Interest Rate Model: Fairly Valued Chart shows Interest Rate Valuation Model as # of standard deviations above/below historic average. Recession periods are shaded. Summary:Low interest rates should generally drive higher equity prices. This model examines the relative S&P500 position given the relative level of interest rates.