S&P 500 Overvalued but Likely to Move Higher

Market headwinds persist while tailwinds subside slightly. The S&P 500 remains historically overvalued, while the bullish effects of massive fiscal stimulus persist but are subsiding.

The S&P 500 has traded within a range around 3250 (red line) to near 3600 (green line) for the past couple of months:

The S&P 500 will likely continue to trade within a range until earnings catch up with stock prices and/or additional fiscal stimulus arrives. When the S&P 500 breaks out we believe it’s more likely above the green line than below the red line. We believe the S&P 500 is in a bull market and are bullish for the upcoming month.

This report reflects the current opinion of the author. The report is based upon sources believed to be accurate and reliable. Opinions and statements about the future expressed in the report are subject to change without notice. The report is not a solicitation or an offer to buy or sell any security.

Is the Covid Crisis a Recession or a Depression? (Historical context)

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Market Valuations in Danger Zone as Federal Reserve Pledges Afterburner

Updated 9/1/2020 Gabriel Private Alpha Fund (after fees) SP-500 (SP-500 ETF SPY) Eurekahedge 50 (50 largest hedge funds) Index AI (Artificial Intelligence) Hedge Fund Index Barclay Hedge Fund Index Hedge Fund Index Return since January 2020 (the inception of GPA Fund) 33.0% 9.5% -5.2% 2.7% 2.3% -0.6% The United States stock market valuations are in a Danger Zone. A formula of stock market valuations around the world indicates that United States markets are the second most overvalued in the world (after India). Frankly our model forecasts negative one and two year S&P 500 returns if considering only market valuations. However the Federal Reserve’s actions in March 2020 temper this bearish outlook. In March the Federal Reserve (Fed) lowered the Federal Funds rate - the rate at which money is loaned to banks - to its present rate near 0% in order to fuel a stalling economy. Lowering the Federal Fund rate fuel...

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