Valuation and fundamentals

Thomson Reuters P/E increased slightly to 17.1 as SPX dropped a bit, so a mild reduction in earnings estimates. 17x potential support 2171, 17.5 current resistance 2234. 

Wall Street Journal publishing more conservative estimates with SPX already at 18.6x forward earnings. It jumped above 18 in mid July and has maintained this since. 18x potential support 21113, 19x 2230.

Both measure show P/E getting into high area of 2015, which itself was the bull market high. If we are in euphoria stage of the bull market I think we can see 18-20x on the Thomson numbers which currently means 2300-2550, but the extremes of the late 1990s are just not going to happen in this decade. 


Citigroup Economic Surprise Index published by Yardeni starting to look like a sharp fade after a rapid move into positive territory. Coincidentally most stocks have been sideways for 2 weeks. This is really something to watch here with sentiment extremes already reached and bonds holding up quite well. A move back into the negative zone would likely result in stock pullback and bond jump (yield drop).