On the Overvalued side, 7.2% of the market is Overvalued which is also an increase; in this case by 2.8 points. About ½ of the stocks in this group still have enough strength in their fundamentals to avoid a Sell consideration. (The stock’s price is higher than fundamentals, but not so high that they are extreme.) However, 2.9% of the market is both Overvalued and has not been able to be ranked well enough to maintain the high valuation and are considered Sell candidates, a 0.2 point increase.
The past year (2018) was not kind to investors, but the market entered the year overvalued and was expected to perform below the long-term average. Unfortunately, as the year progressed, overvaluation pressures increased and eventually investors realized that expectations would not be achieved. The market is now slightly on the undervalued side of a normal valuation range. In 2019 we expect the market to perform slightly better than the long-term average at 8.83%, but not as well as the mid-term average.