Every sector and most types of equities attracted money,
except mostly energy related stocks.
Exuberance continued and is still at its highest for years.
We can also see that the 'ratio of sectors on a buy wait mode' is at its lowest. Such low levels have almost always corresponded to market highs.
Interesting to also see that the NHNL indicator reached 200. This tells us that there is a large participation of small caps. Mostly due to expectation of lower rates.
We can indeed see below that Spikes in the NHNL indicator were largely occuring when the 10Y rate was falling. This especially occured before 2022.
The real question now is whether the 10Y rates are going to fall from here - this is what markets are expecting - or will the Fed go for further rate hikes.
Below are the Q1 2023 and the Q2 2023 expected S&P500 overvaluation levels based on a yield comparison.
Conclusions:
If rates stay at current levels - if the jobs report is poor - then equities will stay between the levels shown below.
However, if we have a good jobs report, inflation expectations will spike and the 10Y rate will probably push to 3.6% minimum, which sets the target prices below actual S&P500 prices:
