May 20, 2010 10:05 AM
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.
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