The following chart, as presented by Dr. Hussman, marks the four times (red arrows) in the last 45 years when the following events took place simultaneously on the S&P 500:
- Record high weekly close
- Fewer than 27% market advisory bears per Investor's Intelligence
- Shiller P/E greater than 18
- Fewer than 60% of S&P 500 stocks above their 200-day average
What’s interesting about these warnings is how closely they identified the precise market peak of each cycle. Internal divergences have to be fairly extensive for the S&P 500 to register a fresh overvalued, overbullish new high with more than 40% of its component stocks already falling – it’s evidently a rare indication of a last hurrah. The 1972 warning occurred on November 17, 1972, only 7 weeks and less than 4% from the final high before the market lost half its value. The 2000 warning occurred the week of March 24, 2000, marking the exact weekly high of that bull run. The 2007 instance spanned two consecutive weekly closing highs: October 5 and October 12. The final daily high of the S&P 500 was October 9 - right in between. The most recent warning was the week ended July 17, 2015.