Connect with us

Hi, what are you looking for?

Prime Webinar GroupPrime Webinar Group

Editor's Pick

S&P 500 Earnings Results Are In for 2024 Q1 and Market Is Still Overvalued

S&P 500 earnings are in for 2024 Q1, and here is our valuation analysis.

The following chart shows the normal value range of the S&P 500 Index, indicating where the S&P 500 would have to be in order to have an overvalued P/E of 20 (red line), a fairly valued P/E of 15 (blue line), or an undervalued P/E of 10 (green line). Annotations on the right side of the chart show where the range is projected to be, based upon earnings estimates through 2025 Q1.



Historically, price has usually remained below the top of the normal value range (red line); however, since about 1998, it has not been uncommon for price to exceed normal overvalue levels, sometimes by a lot. The market has been mostly overvalued since 1992, and it has not been undervalued since 1984. We could say that this is the “new normal,” except that it isn’t normal by GAAP (Generally Accepted Accounting Principles) standards.

We use GAAP earnings as the basis for our analysis. The table below shows earnings projections through March 2025. Keep in mind that the P/E estimates are calculated based upon the S&P 500 close as of March 29, 2024. They will change daily depending on where the market goes from here. It is notable that the P/E is outside the normal range.

The following table shows where the bands are projected be, based upon earnings estimates through 2025 Q1.

This DecisionPoint chart keeps track of S&P 500 fundamentals, P/E, and yield, and it is updated daily — not that you need to watch it that closely, but it is up-to-date when you need it.

CONCLUSION: The market is still very overvalued and the P/E is still well above the normal range. Earnings have ticked down, but are projected to trend higher for the next four quarters. Being overvalued doesn’t require an immediate decline to bring valuation back within the normal range, but high valuation applies negative pressure to the market environment.


Watch the latest episode of DecisionPoint on StockCharts TV’s YouTube channel here!


(c) Copyright 2024 DecisionPoint.com


Technical Analysis is a windsock, not a crystal ball.


Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.


Helpful DecisionPoint Links:

DecisionPoint Alert Chart List

DecisionPoint Golden Cross/Silver Cross Index Chart List

DecisionPoint Sector Chart List

DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Bear Market Rules

You May Also Like

Tech News

YouTube is expecting to launch new AI tools later this year that are trained off the back of these deals. | Illustration by Alex...

Politics

As doubts grow about President Biden’s mental acuity, the spotlight turns to whether he can step down as the presidential nominee while completing his...

Tech News

Image: NASA Voyager 1, the farthest human-made craft from the Earth, is finally sending back data from all four of its scientific instruments, NASA...

Tech News

Astro Bot. | Image: Sony Interactive Entertainment An adorable platformer, mythological tower defense, RPG / puzzle hybrid, and open-world Star Wars. Continue reading…