Valuation and fundamentals

If time permits I will keep all components of my total market view going in some respect:

1. Pivots
2. Other technicals
3. Timing
4. Valuation & fundamentals
5. Sentiment

Pivots are always #1, but the others just depend on whether see are seeing extremes or not. For example, sentiment can go weeks without mattering too much, then ideally we will see a major extreme on a turn. So this means #2-5 are not necessarily in that order, just depends on the week.

Now on to the subject of the post. See the tags for prior versions. 

SPX rather shockingly jumped to 18.50x forward earnings. I am simply reporting the data from WSJ here. This means the SPX total estimated earnings dropped from 117 to 112. To be honest, I really don't understand this move at all. If earnings estimates are dropping that severely, stocks should be coming into selling pressure quite soon. I thought we would see selling at 18x forward earnings, not a jump above the level without any struggle. 18x support (?) 2024, 19x resistance 2136; hard to imagine 18x forward earnings being strong support however. Even in an absolute best case scenario I think the absolute cap for the year would be 20x which currently stands at 2250 or about another 8% up. 

NDX 18.75x forward earnings, so 18x support 4361 and 19x resistance now 4604.

INDU 17.06x so that is near a round 17x at 17834. 18x resistance 18883.

RTY 17.10x so 17x support 1121 and 18x resistance 1187.

Citigroup Economic Surprise Index as posted by Yardeni is still fading from the zero line. It is my belief that a strong rally to take out 2015 highs on multiple USA main indexes will require this going into positive territory. 

Well, this is exactly why pivots are #1 on my list. If valuation of the SPX index jumped nearly an entire point from 17.41 to 18.50 in one week would you think that is a plus? I don't really get it but seems that markets are primed for "sell in May."