Via GaveKal:
US equity valuations are stretched. On pretty much whatever valuation measure you care to look at, whether EV/EBITDA, price to earnings, price to cash flow, price to book or dividend yield, US equity markets are somewhere between their 90th and 99th percentile.
At the same time, sentiment and technical indicators are signaling that US equities are somewhere between “frothy” and “leaning too far over their skis” (and yes, those are technical terms). For example:
• For the MSCI US, the 30-day RSI is close to 70.
• The MSCI US is bouncing along its upper Bollinger band.
• The S&P 500’s put-to call-ratio indicates that sentiment is extremely bullish.
• The S&P 500 is trading at more than one standard deviation above its 200-day moving average.