NFIB’s Small Business Optimism Index just surged to its highest level ever.
In my reflection from 2 days ago, we stated that “this economic expansion is ALMOST (but not quite) as good as it gets”.
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Here’s what happens next to the S&P 500 when NFIB Small Business Optimism exceeds 107 (i.e. right now).
As you can see, this isn’t particularly bearish for the S&P 500. However, this is more bearish for the Russell 2000 (small caps) than it is for the S&P, which suggests that small caps will underperform over the next year.
Moreover, you can see that the stock market’s forward returns are starting to become mixed. Our studies from January – July were very bullish. Now, some of our studies are no longer as bullish. This suggests that we are approaching a major stock market top in 2019.
My upcoming Long Term Risk Model demonstrates that we’re almost at the point at which “things can’t get much better”, but we’re not completely there yet.
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