ACTV - Weekly Market Pulse: Are You Ready For The Roarin' Twenties?

2024-02-13 02:03:00 ET

Summary

• There are some similarities between then and now, but not so much in the stock market.
• The short-term trend of the 10-year yield is now neutral, having broken the short-term downtrend.
• In the shorter term, sentiment is now too bullish and a correction of some kind seems likely.

When I sat down to write this week’s commentary, my intention was to write - again - about the valuation of the stock market, and particularly the S&P 500. And even more specifically about the top 20 stocks, which make up 42% of the index, and trade for an average forward P/E of 27.5. It is an expensive bet on future earnings growth that is far from assured and therefore would seem to carry a lot of risk. But I’ve written that article several times over the last few years - I’m far from the only one - so it isn’t exactly news. And if it isn’t news, if everyone already knows that large-cap stocks are expensive and risky, why are they still expensive? I was taught a long time ago (in a galaxy far, far away…) that one shouldn’t worry about the things that everyone is already worried about; those things are already factored into the market....

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