Jeffrey A. Miller

Positive Divergences Continue to Stack Up

S&P P/E ratio level depends on where you determine the start of the bull market but your point is still valid. On the other hand, a review of the weekly chart for SPX on Marketwatch.com suggests that such an elevated P/E ratio was due to prices declining far faster than EPS rather than from any inherent economic strength. Also, in late 2002 and early 2003 interest rates were artificially low and the housing boom was in full upswing mode. Not likely a precondition this time around.