Correction or Crash?

After shedding nearly 60 points or 3% Tuesday night, the S&P 500 regained 35 last night or 1.8%, ironically spurred along by more poor economic data out of the US, meaning less likelihood of Fed tightening (bad news is good news for pretend markets).  Whilst there is no doubting the volatility of markets at present there is plenty of debate around “correction”, “bear”, or “crash”.  The S&P500 is now down 5.3% this year (by the way gold is up 11.1% and silver up 8.9% in AUD terms), that’s nowhere near the 20% required to be technically a “bear”.  So where to from here?  These 3 graphs tell a compelling tale… (oh and why just US share talk?  Because whilst the rest of the world is going backwards, the US is supposedly our saviour…. You make your own mind up…).

First – crossing ‘the line in the sand’…

Second – as we keep harping on – these are not values based on fundamentals – just an easy money bubble… (Google CAPE – it’s the more instructive P/E measure out there).  You only need one hand to count how many times it’s been higher…

Third – they don’t call this the “death cross” for nothing…