What's Next for Stock Markets After the Spring '10 Correction

On April 16, the ETF Profit Strategy Newsletter pointed out, that “historically, there has rarely been a more pronounced sell signal. The pieces are in place for a major decline.”

On May 14, the newsletter emphasized the bearish setup and warned, that “prices should work their way below Thursday’s (5-6-10) intraday low of 1,066 for the S&P.”
We are there now, what’s next?

A look at valuations shows that stocks are still expensive and historically overvalued. It was just last year that the P/E ratio spiked about 140, as reported by Standard & Poor’s.

The P/E ratio has come down since, but according to Professor Shiller, is still about 40% above the norm. Historically however, the market doesn’t bottom when P/E ratios hit “the norm;” it falls to rock-bottom levels – or at least that’s what it’s done in all major market bottoms.

Based on sentiment readings, technical indicators, fundamentals and valuation metrics, the message is clear: Lower prices are ahead.

The ETF Profit Strategy Newsletter provides a detailed analysis of a variety of indicators mixes with a fair amount of out-of-the-box thinking and short-, mid- and long-term market forecasts, along with a target range for the ultimate market bottom.