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Being a student of Sir John Templeton, I have to look at some fundamental valuations every once in a while, especially when they are hitting extremes. The above chart reflects that the Q-Ratio is 60% below the highs reached in late 1990’s.
If you happen to exclude the 1990’s time frame, the Q-ratio is now within 10% of the highest valuations reached in the past 100 years, where the Dow found it tough sledding going forward.
6 months ago, I shared that “Infinity Ben” could push the Dow to 16,000 (see here) We are now less than 1.75% away from that target, which is the crossroads of resistance at (2) above!
Has Infinity Ben & QE programs made the “Q-ratio” useless? I don’t think so!
From a technical analysis angle the following seems to be important in my humble opinion… Resistance is Resistance until broken! Should buyers push the Dow past 16,000, we would have a positive unique breakout on our hands!