Quick update: Our most reliable gauge of valuations exceeds every point in history, including 1929 and 2000, except for 6 weeks surrounding the 2022 peak. Of course, if extreme valuations were enough to drive the market lower, one could never reach extremes like this. More...
Market internals remain unfavorable and are deteriorating quickly, so there's an open trap door, but even internals don't label extremes. "At present, the 'last straw' of market action that deserves monitoring in daily data relates to 'leadership.'"
Once extreme valuations and deteriorating internals open a trap door, it's then that overextended conditions become worth monitoring. Last week's tally of warning syndromes in weekly data eclipsed the November 2021 "Motherlode"
In daily data, here's something you don't see very often - a 5-year high with negative leadership, particularly coupled with an absence of bearish sentiment. We did see that today.
We also saw dozens of other warning syndromes today in daily data. That combination of a fresh high with deteriorating internals feels excruciating for hedged equity strategies, but it's also a sign to review risk exposure. Not a forecast. Not a top call. Just sharing data FYI.
