In the Emerald City, a.k.a. Wall Street, central banks are the
all-powerful Wizard of Oz. Dorothy and her friends are hopelessly
bullish.
Unlike the magical Land of Oz, however, there is no yellow brick road for stock investors nowadays.
Instead, there have been 37 consecutive trading days without a 30-point pullback on the S&P 500 SPX, -1.42% . The last time that happened, the S&P suffered a 200-point slide.
There have been 48 new highs on the S&P 500 in 2014. The last time the S&P 500 had so many closing highs was in 1929.
Does history repeat itself? On Dec. 5, the S&P 500 reached a record closing high of 2075.37, and its highest intraday level of 2079.47. To put that into perspective, on March 24th, 2000, the S&P reached a closing high of 1552.87 during the dot-com bubble before crashing by 50%. On October 9, 2007, the S&P had a record close of 1565.15, and then tanked a month later.
Does P/E matter? The current P/E of the S&P 500 is 19.54. The Shiller-P/E is 26.8. Typically, the average P/E of the S&P 500 is 14.
Some stock-market veterans complain that the market is so skewed, traditional indicators are useless. For example, the RSI of the Dow Jones Industrial Average DJIA, -1.39% is at 75.96, well above the typical overbought level of 70. And the RSI of the S&P 500 inched up to 67.89. The market can remain overbought for long periods, but not forever. This market must come back to earth eventually.
Read m ore: Investors must believe in magic to buy stocks now - MarketWatch
Unlike the magical Land of Oz, however, there is no yellow brick road for stock investors nowadays.
Instead, there have been 37 consecutive trading days without a 30-point pullback on the S&P 500 SPX, -1.42% . The last time that happened, the S&P suffered a 200-point slide.
There have been 48 new highs on the S&P 500 in 2014. The last time the S&P 500 had so many closing highs was in 1929.
Does history repeat itself? On Dec. 5, the S&P 500 reached a record closing high of 2075.37, and its highest intraday level of 2079.47. To put that into perspective, on March 24th, 2000, the S&P reached a closing high of 1552.87 during the dot-com bubble before crashing by 50%. On October 9, 2007, the S&P had a record close of 1565.15, and then tanked a month later.
Does P/E matter? The current P/E of the S&P 500 is 19.54. The Shiller-P/E is 26.8. Typically, the average P/E of the S&P 500 is 14.
Some stock-market veterans complain that the market is so skewed, traditional indicators are useless. For example, the RSI of the Dow Jones Industrial Average DJIA, -1.39% is at 75.96, well above the typical overbought level of 70. And the RSI of the S&P 500 inched up to 67.89. The market can remain overbought for long periods, but not forever. This market must come back to earth eventually.
Read m ore: Investors must believe in magic to buy stocks now - MarketWatch
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