1. Crestmont P/E valuation only exceeded at 1929 peak and in 2000:
2. CAPE / Shiller PE / PE10 valuation only exceeded in 1901, 1929 and 2000:
3. Compound annual growth rate since 2009 bull start only exceeded into 1929, 1937, 1987 and 2000 peaks:
4. Q ratio valuation at major historic peak levels, barring 2000 outlier:
5. Stock market capitalisation to GDP from Fed data second highest in history:
6. Stock market capitalisation to GDP based on Wiltshire 5000 (the broadest and most comprehensive US index) equal highest in history with 2000:
7. Margin debt as a percentage of GDP joint highest in history with 2000 (and net investor credit at all time low):
8. US household equities exposure at level of previous major peaks, barring 2000 outlier:
10. Panic/Euphoria second highest ever euphoria after 2000:
12. Sunspot, geomagnetism and lunar phase potential historic convergence:
Solar maxima deliver speculative peaks but as these peaks in the sun’s activity occur only around every 11 years, we see cyclical market peaks in between. More often than not markets peak in the seasonal (inverted geomagnetism) highs around December and July, and within the month they typically fall close to new moons. If the Dow peaked 31 Dec 2013, the closest parallels as highlighted in the table are 1980 gold and 1989 Nikkei. Both these were secular peaks occuring at a solar maximum, at the turn of the year and close to a new moon. The Nikkei is particularly pertinent as it peaked on the last trading day of the year and led Japan into a period of deflation, which I believe awaits the US now. US deflationary recessionary demographics should break the Dow out of a very long secular run that has been in place from the 1940s to now.
If the Dow and Nikkei did not peak on 31 Dec 2013, then the next new moon would be 1 March 2014, by which those indices would need to be at new highs. However, by that point we have moved into the (geomag-inverted) seasonal lows, and, based on current solar forecasts, gradually away from the solar maximum. The caveat to that latter point is if solar forecasts are wrong and we see a stronger sun in the weeks or even months ahead, making for a higher cluster of sunspot spikes. We might then look to the next seasonal high period of June-August and future new moons in looking at top-timing probabilities (note probabilities, as the table shows exceptions). However, the stronger case is for the 31 Dec 2013 top, and the evidence that has built up since then is supportive, including January spikes in trading volume and insider selling, 2014 money flows into treasuries, gold and defensive sectors and a downtrend in economic surprises. The last piece of the puzzle is for price to now confirm, with the Dow rolling over again this week, and in doing so adding a lower high to the Jan/Feb lower low, marking a trend change. Prices on the US indices hit technical targets on Friday, and volume for the rally remained divergent, setting up that roll over potential. We had a geomagnetic storm for the second weekend in a row too. However, we are clearly very delicately poised: either a definitive bullish breakout (with bullish internals) from here postpones a market top into the future, or we are at the top of the ‘second chance’ and staring at a major bearish opportunity.