S&P 500 Price to Sales

Sometimes we need a reminder of how expensive the US stock market is.  The S&P 500 price to sales ratio is higher than the 2000 dotcom bubble high.  

This market makes the 2007 SPX valuations look cheap by comparison.  Sure, there has been a big boost to corporate profit margins, and thus lower price/earnings ratio than the 2000 top, but there was more "potential" back then.  Interest rates were much higher, so there was more potential monetary stimulus, and budget deficits were lower, so there was more potential fiscal stimulus.  

Right now, interest rates are below the rate of inflation, and you just had huge fiscal stimulus which is blowing up the budget deficit.  Also, since a lot of the corporate profit margin gains have come from heavy M&A activity and the subsequent reduced competition, how much more can that juice be squeezed?  At some point, the consumer can't keep up, as wage gains are minimal, and the economy goes downhill.  

These are all long term negatives for the US stock market.  

Yesterday we got an intraday reversal after a gap up and strong morning session.  The air looks too thin up at SPX 2825.  The market is running out of oxygen, the fund managers have had over 3 months since the April bottom to reallocate back into equities.  The bus seems very full here, and the bulls seem as arrogant as ever.  If we get back towards yesterday's highs this week, I will add to the SPX short.