Reversion to mean Shiller PE would take SPX down another 40% there is room to fall further, 27 >17:
Current Shiller PE Ratio: 27.04 -0.20 (-0.75%) 4:00 PM EDT, Mon Oct 10 Mean: 16.98 Median: 15.89 Min: 4.78 (Dec 1920) Max: 44.19 (Dec 1999)
Shiller PE ratio for the S&P 500.
Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10
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Remember the rule of 2/3: 1/3 of the price drop in bear market occurs in first 2/3 of market time course.
SPX now down 1200 pips from ATH in 9 months. Typical bear will last 15 months or more.
NB: 2/3 of price decline occurs in last 1/3 of time course;
Ergo SPX has a helluva drop coming in next six months. IMpossible to say when exactly this is coming but winter 2023 could be real grim.
Trade active
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Flipped calls in AM puts in PM. Shorted EOD. Close below 3600 implies imminent breakdown IMO. NB: Rejected from 3630, former support became resistance.
Gonna tank off IMO, regardless where the CPI comes in. If it's worse, going down like ton of bricks. If it's slightly better, they will say it's not good enough and go down anyway.
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Closed out all AH and happy about that, see how the clowns pump it o/n. Washout low coming imo.
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Nuts. Algos were primed to buy 350. No one saw this coming. It's a ferocious bear rally, see if it gives way to a higher low next week. No positions.
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Nice dump. No Fed Pivot in sight. Get ready for a massive dump, again. Probly headed back to test LOTY 3500.
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Holding 15 each SPY QQQ VSP and ten DIA 320 puts.
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Gonna close these out in open, got a wee gap; take what it gives you. Gone into strong oversold condition, some kind of bounce is likely, although it may just grind down all day.
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Flipped P & C all day. Down up down. Never got the gap filled, pushback over and over from 15-20 pips below. EOD sell and AH action resembles weds nite so we may expect more volatility friday and EOW risk-offf could be sharp.
That massive dump may be next week --we print a 8.5% Oct CPI -- gas and food still rising,,,,Holding QQQ puts and /ES short
DaddySawbucks
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@CapeAfrican, you might think about taking some gains off the table. won't go straight down always bounces
thriftyIguana55646
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god
YOGI29
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your big top looking good into mid-term and then we could go down rest of the year. everyone is looking directly lower and this seems to be playing out perfectly so far after a little-top and new lows. will be a bank of both sides if this plays out. lol.
DaddySawbucks
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@YOGI29, doubt we get a 'big top' looks pretty dam shaky atm, has gone nowhere again
YouCannotBeSerious
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Wednesday. October. Been there before? It has all the ingredients of a huge down day. With Bailey making clear that the BOE are only so stupid, there will be a mad dash to sell UK assets. Add in CPI and you already have a heady cocktail for the making. Throw in a few more Russian bombs, or whatever, and BOOM, 5-10pc down in a heartbeat. Short it!
DaddySawbucks
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@YouCannotBeSerious, CPI won't matter the bears have gripped it now in control, goin down regardless
CapeAfrican
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CPI may not be too bad --- but after the new OPEC cuts and now rising fuel prices....the new spiral up of CPI -- In Nov they print a huge increase in October CPI just in time for the big fat .75% rate hike....the kiss of death to this bubble...meanwhile 3 rd qtr eps will suck as everyone steers down guidance -- starting with 6 major banks this Friday --- increased loan loss reserves -- increasing bad loans..bad economic outlook.....thanks for a clear picture in this chart...and the you tube link!!
DaddySawbucks
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@CapeAfrican, follow Peter Eliades, he's a genius. You can sign up for youtube updates free. I had a sub to his service but never could figure out the software, lol. He always reminds us no one can predict the daily movements and freely admits he has been wrong but mostly gets it right. He works on probability model and always warns the model can be mistaken, randomness does enter and surprises will come, but odds favor a move substantially lower atm.
CapeAfrican
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@DaddySawbucks, I did subscribe to Peter - his friends are DeMark and Larry Williams - both pioneers of tech analysis. Man alive he was pointing to charts in 73/74 recession....Thanks for the introducion....