Keep an eye out for an updated Stock Analysis workbook, with many more interesting graphs and correlations. This will be finished within the next few days.
However, in the meantime I wanted to notify you of a few important red flags.
In my last update I described that the market's overall P/E was relatively undervalued compared to recent history and had greater potential to rebound.
Well recently, the stock market has certainly rebounded upwards. In fact, the rebound has been so significant that the market P/E is approaching overvalued territory once again.
Increased market capitalizations are only part of the reason the P/E is so high; the other reason (most importantly) is that overall company earnings have been on a steady decline for a year now.
The combination of a significantly fast rebound, with decreasing stock market earnings, seems to indicate we are due for another dip soon. While it is not the end of the world, I'dd recommend being more prudent when taking bullish positions, and consider adding some bearish positions.
One other indicator is the number of shares shorted is at the highest level since we have been tracking the market over the past three years. This further indicates increasing skepticism of the market.
The next workbook update will include a graph of shares shorted, as well as many other valuable analyses.