What Does The S&P 500’s Forward P/E Controlled For Volatility Signal?

In a blog post in early February, we showed that our Complacency-Anxiety Indicator hit a new high. Another way to measure greed overwhelming fear is the relentless rise of the S&P 500 forward P/E over the VIX. The spread between these two measures can also gauge complacency. As seen in the chart, this indicator has also soared to an all-time high. Momentum continues to drive the broad market trend and valuations have taken a backseat, emblematic of blow-off phases.

How long can this overshoot phase last? There are obviously no easy answers. However, in the absence of any major monetary, economic and/or geopolitical shocks, an examination of our Composite Technical Indicator suggests…

For additional details, please refer to the U.S. > Equity Strategy Report titled “Overbought, But…”, available at uses.bcaresearch.com.


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