Dave Rosenberg in his “Breakfast with Dave” for Thursday, May 20th points to the Shiller PE ratio:

In the past 130 years, whenever the Graham/Dodd/Shiller normalized P/E ratio goes above 20.6x (it is 21x today), the market experiences a significant correction – a correction of 31% on average over the next 16 months. It never fails.

It never fails… hmmm, 31% down on the S&P from here would put the S&P down to about 770.

More on this topic (What's this?)
Nearly 70% Of S&P 500 Stocks In Correction Or Bear Market Territory
S&P Approaches Critical Tipping Point
S&P500 Getting Ready to Break
S&P Setup For Re-test Of August Low
Read more on S&P 500 (SPX), Price to Earnings, Shanghai Growth Inv at Wikinvest

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