We've all heard the routine in which emergency medical technicians rattle off a string of data to characterize the physical condition of a patient. By going through this checklist of vital signs, doctors immediately know where to focus their attention and what to fix first.
In much the same way, Steve Hochberg, the chief market analyst at Elliott Wave International, has been pouring over a list of stock market vital signs, and has concluded that there are many things wrong.
As Hochberg explains in the attached video, the record highs that stocks are hitting become irrelevant once you look at things in a different light.
"The market is going up in dollar terms, but when you look at the Dow or S&P, in real money terms such as gold or purchasing power divided by commodities," he says "the all-time high for the market is back in 1999."
By his math, if you "peel away the top layer" divergences start to appear and, as he recently wrote to subscribers, the rally in stocks is being fueled "by a toxic mixture of sky-high and waning economic conditions."
"I think there's a lot to not like about the market here," he says, before listing some of the 20 different indicators that are currently at or near extreme levels, including complacency, bullish consensus, margin and leverage in long positions, and record low mutual fund cash-to-asset ratios.
"People keep talking about the 'wall of worry' but in the indicators themselves, we don't see it," Hochberg argues, while making the case to stay liquid and safe until a better buying opportunity presents itself in the future.
"Sentiment is a blunt instrument. It won't tell you exactly when the market is going to make a turn, but it gives you a good backdrop and landscape," he says, "and right now it is telling us we're a lot closer to the end than the beginning."