Historical data suggests that S&P500 is not cheap or fairly valued. Even though S&P500 is slipping from the record high, based on historical data stocks seem to be highly valued.
looking at the channel depicted on the S&P500 chart since 1940, upper channel line implies that stocks are highly valued while channel's middle line suggests that price is fairly valued. If stocks are to be fairly valued, S&P500 has to trades between 3300 and 3000. That means stocks has to fall more than 30% from record high. If S&P500 falls below 3000 mark or lower toward 2000, history suggests that stocks are undervalued.
looking at the channel depicted on the S&P500 chart since 1940, upper channel line implies that stocks are highly valued while channel's middle line suggests that price is fairly valued. If stocks are to be fairly valued, S&P500 has to trades between 3300 and 3000. That means stocks has to fall more than 30% from record high. If S&P500 falls below 3000 mark or lower toward 2000, history suggests that stocks are undervalued.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.