The latest ascent into record-high territory for the S&P 500, with historically high P/Es, naturally has raised fears of a correction, or worse. It seems to me that the market is doing a very good job of correcting internally on a regular basis without giving up the high ground. The latest example is the recent sell-off in technology stocks and rebound in financials. That might continue without triggering a market-wide sell-off.
Meanwhile, two of my favorite weekly fundamental stock market indicators continue to support the bull market trend. Here is an update:
(1) My Boom-Bust Barometer (BBB) is simply the ratio of the CRB raw industrials spot price index and weekly initial unemployment claims. It remains in record-high territory, with a whopping y/y gain of 21%.
(2) My Fundamental Stock Market Indicator (FSMI) averages the BBB and the Bloomberg weekly Consumer Comfort Index. FSMI tracks the S&P 500 even better than my BBB. It is also up in record territory, with a gain of 13% y/y.
(3) Forward earnings. Both measures have been highly correlated with the S&P 500 since 2000. That’s because both have been highly correlated with the forward earnings of the S&P 500, which rose to yet another record high during the 6/29 week.
