No Need to Panic - But Caution is in Order

The signs say we are near the top of the Market.  No one, especially myself, can tell you the date or the price at the top but a little common sense can tell you if the top has been reached and which side of the wave we are on.


The Conference Board says the Leading and Coincident Economic indicators are still on the rise:

Their Press Release:

The Conference Board Leading Economic Index® (LEI) for the U.S. Increased Again
NEW YORK, June 18, 2015…The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.7 percent in May to 123.1 (2010 = 100), following a 0.7 percent increase in April, and a 0.4 percent increase in March.

“The U.S. LEI increased sharply again in May, confirming the outlook for more economic expansion in the second half of the year after what looks to be a much weaker first half,” said Ataman Ozyildirim, Director, Business Cycles and Growth Research, at The Conference Board. “While residential construction and consumer expectations support the more positive outlook, industrial production and new orders in manufacturing are painting a somewhat more mixed picture.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.1 percent in May to 112.1 (2010 = 100), following a 0.2 percent increase in April, and no change in March.
The Conference Board Lagging Economic Index® (LAG) for the U.S. increased 0.2 percent in May to 117.0 (2010 = 100), following a 0.2 percent increase in April, and a 0.5 percent increase in March.

The Value Line Arithmetic Index has been on a tear for the last 5 years as is shown on this weekly chart:

But a closer look at this daily chart over the last year appears to indicate its running out of steam:

Value Line each week gives a scorecard on 3 great Market indicators:

The Markets Price Earnings ratio:

• 18.9 Presently 
• 19.3 Market peak 5/21 
• 19.0 26 weeks ago

The Markets Dividend Yield:

• 2.1 Presently
• 2.0 Market Peak 5/21
• 2.0 26 weeks ago

Market Appreciation Potential:

• 40% Presently
• 35% Market Peak 5/21
• 30% 26 weeks ago

The Market has clearly run out of steam and hasn't made any significant progress over the last 6 months.  The Value Line Index is only 3.70% off its previous high.

My Conclusion:  No need to sell out in PANIC but at the same time you need to evaluate each of your holdings and decide at what price will you sell.  Don't wait - be proactive and rational not reactive and emotional.