Is the SPX Forming a Market Top? A Look Back at 2000 and 2007

Although some seem to be opposing the view before the background of ultra-low interest rates and bond yields, stock markets have arguably reached an elevated niveau, based on dangerously optimistic valuations.

Despite the politics-driven nature of the current environment, the signs intensify that we are approaching what may very well be a market top. As prices have failed to establish new highs over the past couple of months, various market indicators now suggest that we may be approaching a market top. The following chart shows the S&P500 along with three much-followed indicators. The readings of these measures increasingly resemble those at the previous two market peaks in 2000 and 2007.