Tuesday, October 20, 2009

Hussman -- The Stock Market Has Never Been This (Intermediate-Term) Overbought

Biiwii's News & Analysis page links to this article by John Hussman:

The Stock Market Has Never Been This (Intermediate-Term) Overbought

I think it's worth your time to read. I am not exactly sure what his definition of 'over-bought' is here, though he does mention something about the number of stocks trading above the 50 and 200 day moving averages. if that is the criteria then he is certainly on track, the stock screen that I've been tracking of S&P 500 components trading below the 20, 50, and 200 day moving averages is at an absurdly low 13 now (though it was as low as 11 a few days ago).

Hussman says the only time the Stock Markt has been close to this over-bought was in November of 1980. he shows a chart of the S&P in the early 80s, but for reference I offer a chart of the market here too, with the price of Gold (mentioned in the article) and T-Bonds in the lower panels. note the broadly positive correlation of the three markets over the three year period featured...