Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

What Could Possibly go Wrong with S&P 500

46 sec read

S&P 500 index is at the extreme positive sentiment getting into a sort of parabolic move. Since March 2009 $SPX moved from the low of 666 to 3329 levels. That is 5 times of returns since the major swing lows of 2009.

After the 2008 crisis, S&P 500 made bigger annual returns during the year 2009 (23.5%), 2013(29.6%), 2019(28.9%)

Shiller PE – a measurement of market valuation is currently at 31.7 levels which is a clear indication of fundamentally overvalued markets.

Investors’ sentiment in the US markets is at an extreme peak. Quarterly charts depict clearly the investor’s mood at extremely high for the last two quarters resulting in a vertical uptrend which is clear information that markets are full of uninformed investors.

As of today, the Total Market Index is at $ 33828.6 billion, which is about 157% of the last reported US GDP.

Warren Buffet Indicator’s market cap to GDP ratio is currently at 157% which is a clear indication that markets are overvalued. If the indicator gets too top-heavy, with the total market value of stocks significantly exceeding the productivity of the underlying companies, Buffett would say stock prices are due for a correction.

S&P 500 – Quarterly Charts

Since October 11, when the Fed announced it would begin buying Treasury bills, the S&P 500 has risen about 12 percent.

So What could Possibly go wrong?

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

S&P500 – Over Heated News Driven Markets

Markets are celebrating the US Inflation Numbers. US Inflation Rate is at 7.75%, compared to 8.20% last month and 6.22% last year. And the Expectation...
Rajandran R
37 sec read

Global Markets and 200 Weekly Moving Average – Oct…

In this post we try to understand state of the Global Markets , Current Investing sentiment across the globe and where the global markets...
Rajandran R
47 sec read

S&P 500 Long Term Activity is turning to Bear?

Three Consecutive negative quarterly returns since the start of the year 2022. That's the current identity of S&P500 which happened only in bear markets....
Rajandran R
53 sec read

Leave a Reply

Get Notifications, Alerts on Market Updates, Trading Tools, Automation & More