=== Wrecking Ball By John P. Hussman, Ph.D. | July 17, 2017
There’s a Wall Street aphorism that one can talk about time, and one can talk about price, but never about both. For that reason, feel free to take the following chart with a grain of salt. From our perspective, we would be inclined to take far more salt if our own measures of valuations, market internals, and overextended conditions were not so hostile as well. As conditions stand, the overall analysis contributes to our general view that the speculative pendulum is dangerously overextended.
In any event, the estimate that best fits recent market dynamics would place the critical point in the first week of August, within less than 2% of current levels. Indeed, the 30-day crash probability that we estimate from this particular model is rising vertically, and will continue to do so with every market advance from this point. In practice, based on a much broader set of historically reliable evidence, we already view the market as highly vulnerable to steep, abrupt losses. . .