Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

This chart indicates that as long as treasuries rates stay suppressed, the SP 500 is really not overvalued and it has ample room for going up. Of course, rates of treasuries are only one part of the equation and from the three major drivers of stock prices, relative returns (which is really what this chart shows), liquidity and sentiments, only the sentiments indicators are in extreme bearish territory. The super bears are making the argument that major bull moves do not start when the SP PE is above 15/20, but the real measure is the PE relative to the treasuries, and in the last 50 plus years, only the bottom of the 1974 market had smaller relative PE. Longer term (over the next decade) it is quite possible that the risk free PE will stay higher on the average than the SP's PE keeping stocks in a trading range, but the Pretcher like forecasts of Dow 3000 are not likely to come true, IMTO.