This is a great article, one that points out basically the trends in the market that point to significant over valuation in the S & P.

History teaches us that overvalued markets can’t last forever. History also teaches us how far the market will have to drop to reach fair values. The bear markets of the 1930s, 1940s, 1950s, 1970s and 1980s have provided us with a valuation reset template.

Every bear market bottom has seen P/E ratios drop to historically low levels. Investors, however, don’t have to rely on P/E ratios alone. Dividend yields, mutual fund cash levels, and the Dow measured in the only true currency – goldprovide another window into the future – a nearly fail-proof composite indictor.

Points #3 and #4 (Earnings are a lagging – not leading – indicator, No Demand for Products) are the strongest examples as to why the market is facing a major hurdle.

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1. Four Bear Markets Chart Update
2. Take a look at the past four bear markets
3. Updated bear market chart
4. FDIC running out of funding? Update on the banking collapse.
5. The Coming Week of Financial Fun