Connect with us

Hi, what are you looking for?

Trading Secrets

S&P 500 2023 Q1 Earnings Show Improvement

The following chart shows the normal value range of the S&P 500 Index, indicating where the S&P 500 would have to be in order to have an overvalued P/E of 20 (red line), a fairly valued P/E of 15 (blue line), or an undervalued P/E of 10 (green line). Annotations on the right side of the chart show where the range is projected to be based upon earnings estimates through 2024 Q1.



Historically, price has usually remained below the top of the normal value range (red line); however, since about 1998, it has not been uncommon for price to exceed normal overvalue levels, sometimes by a lot. The market has been mostly overvalued since 1992, and it has not been undervalued since 1984. We could say that this is the “new normal,” except that it isn’t normal by GAAP (Generally Accepted Accounting Principles) standards.


We use GAAP earnings as the basis for our analysis. The table below shows earnings projections through December 2023. Keep in mind that the P/E estimates are calculated based upon the S&P 500 close as of March 31, 2023. They will change daily depending on where the market goes from here. It is notable that the P/E is again outside the normal range.

The following table shows where the bands are projected be, based upon earnings estimates through 2024 Q1.


This DecisionPoint chart keeps track of S&P 500 fundamentals, P/E and yield, and it is updated daily — not that you need to watch it that closely, but it is up-to-date when you need it.


CONCLUSION: The market is still very overvalued and, with a P/E of 25.44, well above the normal range. Earnings have ticked up, breaking the down trend of the prior three quarters, and they are estimated to be higher for the next four quarters. Being overvalued doesn’t require an immediate decline to bring valuation back within the normal range, but high valuation applies negative pressure to the market environment.



Watch the latest episode of DecisionPoint on StockCharts TV’s YouTube channel here!


(c) Copyright 2023 DecisionPoint.com


Technical Analysis is a windsock, not a crystal ball.


Helpful DecisionPoint Links:

DecisionPoint Alert Chart List

DecisionPoint Golden Cross/Silver Cross Index Chart List

DecisionPoint Sector Chart List

DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Bear Market Rules0

You May Also Like

Financial News

McCarthy’s Speakership Hangs in the Balance as House Greenlights Stopgap Funding Bill: A Defining Moment Looms In a stunning turn of events, the future...

Financial News

Conservatives Call for GOP Candidates to Step Aside After Second Debate: A Call to Streamline the Republican Race In a surprising turn of events,...

Financial News

Poll Unveils GOP Primary Voters’ Resounding Verdict on Best Republican Debate Performance In the midst of a heated Republican primary race, the GOP primary...

Financial News

Jeffries’ Strategic Maneuver: Outsmarting McCarthy to Avert Shutdown Crisis