It's important to keep in mind that when the market gets to extremes, like it is now (25x PE ratio, 27x Schiller PE ratio, 2x Price to sales ratio, 125% of total GDP,) it's easy to throw up your hands an join them. However, it's important to keep in mind that interest rates are increasing globally. That is very enticing for a money manager. Also, most sectors have performed incredibly well over the last 2 weeks. Do you lock in gains at high valuations, or let it ride? I think money managers would rather lock in gains and sell than to possibly have the air deflated from prices as Trumps policies gain more clarity, or more importantly, reality.
You forgot Debt-to-GDP 77%. Too much debt around the world. At 100% debt-to-gdp, expect a reset. Deutsche Bank may be the next to fall. That would take down most of Europe. Chinese real estate is very, very high. They are selling 66 square feet apartments in Shanghai for 100K. Average wage in Shanghai is 15K. Can't last forever. The funny thing about Shanghai is that many of the buildings are empty, because they ran out of money during building, and abandoned the project.
BhaktaBasics
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The key information in your analysis is 'interest rates are increasing globally'. I'm not sure this is the case yet. If the FED show the world (yet again) that they have no back bone and fail to raise rates in Dec, the SPX could be up, up, up and away ...
stantrader
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@BhaktaBasics, good points. I don't mean central banks are raising rates. I mean the market is increasing credit spreads around the globe as we speak. Yet the stock markets continue to rise. Eventually these two are out of balance and they will have to move to an equilibrium, and that only points south for the stock market.
BhaktaBasics
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@stantrader, I agree but we have the age old issue with timing ... the markets can stay irrational far longer than the average trader can remain solvent. For what it's worth i think we will have one more wave up to get everyone bullish on the $ and then when the majority are feverish with excitement and proclaiming that markets only go up, the rug will be pulled!
BhaktaBasics
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@BhaktaBasics, If you believe in EW theory, i have the count looking like this. However, EW theory is rather subjective and i'm sure there are many different counts out there.