Overview › Size and valuation
Stock market valuation today
What investors pay for the typical large company's sales, against all history since 2016. Updated after every US market close: stock market valuation (price to sales and price to earnings), with its exact rule and its record since 2018.
What it means now
Valuation is neutral today. Median price to sales 3.70x; more expensive than 79% of readings since 2016. A week ago it was bearish (3.80; now 3.70). On days in this state since 2018, SPY returned +3.9% on average over the next three months, against +4.0% from any day. A description of the past, not a forecast.
- SPY
- Bearish
- Bullish
- Median price to sales, 500 largest
How is the market's valuation measured here?
Expensive markets can stay expensive for years, so valuation says little about the next few weeks. It is included because it shapes how far prices can fall when something goes wrong.
How it is calculated
- Each week: the median price-to-sales ratio of the 500 largest US companies.
- Compared with every earlier reading since 2016: bearish when in the most expensive 20%, bullish when in the cheapest 20%, neutral between.
A standard setting, fixed before testing, not the best of the variants below. A state is decided from a day’s closing prices and published after that close.
How reliable has it been? Its record since Sep 21, 2018
Holding SPY, but T-bills while Valuation was bearish, would have returned 9.2% a year with a worst fall of −23.4%, against 14.3% a year and −33.7% for SPY held throughout. Of its bearish signals with three months of history after them, 4 of 12 (33%) were followed by a fall of 5% or more in SPY within three months, against 33% of all 1,965 days (neighbouring days overlap, so days are not independent events). After its 7 bullish signals SPY returned +10.2% on average over three months, against +4.0% from any day. It turned bearish ahead of 4 of the 4 declines of 10% or more in this period.
- SPY
- Bearish
- Bullish
- Median price to sales, 500 largest
The full record and research: every state, decline, signal, variant and setting tested
SPY after each state
| From | Days | SPY, next month (avg) | SPY, next 3 months (avg) |
|---|---|---|---|
| Bearish days | 1,005 | +0.9% | +3.2% |
| Neutral days | 932 | +1.2% | +3.9% |
| Bullish days | 91 | +6.4% | +14.3% |
| All days | 2,028 | +1.3% | +4.0% |
Averages over every day in that state; the periods overlap, so treat them as a description, not a forecast.
Every decline of 10% or more
| High | Low | Fall | Bearish by the high | Days bearish on the way down | A month after the low |
|---|---|---|---|---|---|
| Sep 21, 2018 | Dec 24, 2018 | −19.3% | Yes | 23% | Neutral |
| Feb 19, 2020 | Mar 23, 2020 | −33.7% | Yes | 50% | Neutral |
| Jan 3, 2022 | Oct 12, 2022 | −24.5% | Yes | 2% | Neutral |
| Feb 19, 2025 | Apr 8, 2025 | −18.8% | Yes | 34% | Neutral |
“Bearish by the high”: bearish at some point from a month before SPY’s high to a week after it.
Every signal (21), newest first
| Date | Turned | SPY 1 month later | 3 months | 6 months | Lowest close within 3 months |
|---|---|---|---|---|---|
| Oct 9, 2026 | Bearish | – | – | – | – |
| Aug 7, 2026 | Bearish | −0.9% | – | – | – |
| Jun 12, 2026 | Bearish | +2.0% | +2.8% | – | −1.5% |
| Apr 10, 2026 | Bearish | +8.8% | +10.5% | +15.2% | +1.0% |
| Aug 8, 2025 | Bearish | +2.1% | +5.5% | +9.5% | −0.3% |
| Jun 27, 2025 | Bearish | +3.3% | +7.9% | +12.9% | +0.4% |
| Jan 17, 2025 | Bearish | +2.6% | −13.7% | +5.9% | −16.7% |
| Dec 27, 2024 | Bearish | +1.7% | −5.4% | +4.9% | −7.3% |
| Nov 8, 2024 | Bearish | +0.8% | +1.2% | −1.1% | −2.6% |
| Oct 18, 2024 | Bearish | +0.6% | +4.1% | −7.8% | −2.7% |
| Oct 20, 2023 | Bullish | +7.9% | +15.6% | +20.9% | −2.5% |
| Sep 22, 2023 | Bullish | −2.3% | +10.3% | +21.6% | −4.6% |
| Mar 10, 2023 | Bullish | +6.6% | +11.8% | +17.1% | −0.1% |
| Oct 14, 2022 | Bullish | +10.5% | +11.7% | +16.8% | +2.2% |
| Dec 31, 2021 | Bearish | −4.6% | −4.3% | −19.0% | −12.4% |
| May 29, 2020 | Bearish | +0.5% | +15.0% | +20.2% | −1.2% |
| Mar 13, 2020 | Bullish | +6.0% | +13.6% | +25.4% | −16.7% |
| Mar 6, 2020 | Bearish | −10.4% | +8.0% | +17.3% | −24.6% |
| Feb 15, 2019 | Bearish | +2.3% | +3.5% | +5.1% | −1.0% |
| Dec 7, 2018 | Bullish | −1.5% | +6.7% | +10.7% | −10.6% |
| Oct 26, 2018 | Bullish | +1.2% | +1.4% | +11.1% | −11.2% |
Variants tested
The same measures for other common settings, so the result can be checked for luck: a rule that only works with one exact number is fragile. The highlighted row is the published rule.
| Variant | SPY or T-bills, a year | Worst fall | Days bearish | Bearish signals | Followed by a 5% fall | Bullish signals | SPY 3 months after |
|---|---|---|---|---|---|---|---|
| Price to sales, top/bottom 20% (this site's rule) | 9.2% | −23.4% | 50% | 14 | 33% (4 of 12) | 7 | +10.2% |
| Price to sales, top/bottom 10% | 9.1% | −28.3% | 28% | 9 | 22% (2 of 9) | 5 | +10.7% |
| Price to sales, top/bottom 30% | 10.3% | −19.2% | 65% | 12 | 25% (3 of 12) | 7 | +9.2% |
| Price to earnings, top/bottom 20% | 9.0% | −28.3% | 25% | 13 | 15% (2 of 13) | 6 | +5.8% |
| SPY held throughout | 14.3% | −33.7% | – | – | 33% (any day) | – | +4.0% (any day) |
“SPY or T-bills”: SPY, switching to T-bills (BIL) at the next close after the rule turns bearish and back after it stops, 0.10% per switch, interest and dividends included. Hypothetical: no costs beyond that, no taxes.
Overlap with the other indicators
It agreed most often with 90% up and down days (43% of days in the same state). An indicator that almost always agrees with another adds little to the score.
Agreement with every indicator
| Indicator | Same state |
|---|---|
| 90% up and down days | 43% |
| Hindenburg Omen | 42% |
| Zweig breadth thrust | 40% |
| Stocks beating SPY | 38% |
| Up/down volume | 38% |
| Stocks above their 20-day average | 33% |
| McClellan Oscillator | 30% |
| Equal weight against SPY | 30% |
| Small against large companies | 20% |
| Stocks above their 200-day average | 19% |
| Sector breadth | 16% |
| Advance-decline line | 12% |
| New highs minus new lows | 7% |
Research: what worked and what did not
The same test run many ways: the published rule year by year, every variant year by year, and grids over its settings. Return numbers are SPY-or-T-bills against SPY over the same days, in points; green means better than holding SPY, red worse.
Year by year
| Year | SPY | SPY or T-bills | Difference, points | SPY’s worst fall | Days bearish | Days bullish | Bearish signals |
|---|---|---|---|---|---|---|---|
| 2018* | −13.9% | −8.8% | +5.1 difference in 2018 | −19.3% | 22% | 30% | 0 |
| 2019 | 31.2% | 13.0% | −18.2 difference in 2019 | −6.6% | 88% | 6% | 1 |
| 2020 | 18.4% | 13.6% | −4.8 difference in 2020 | −33.7% | 77% | 8% | 2 |
| 2021 | 28.7% | 2.4% | −26.3 difference in 2021 | −5.1% | 90% | 0% | 1 |
| 2022 | −18.2% | −16.2% | +2.0 difference in 2022 | −24.5% | 2% | 2% | 0 |
| 2023 | 26.2% | 26.2% | +0.0 difference in 2023 | −10.0% | 0% | 12% | 0 |
| 2024 | 24.9% | 26.5% | +1.6 difference in 2024 | −8.4% | 15% | 0% | 3 |
| 2025 | 17.7% | 15.4% | −2.3 difference in 2025 | −18.8% | 64% | 0% | 3 |
| 2026* | 12.8% | 10.2% | −2.6 difference in 2026 | −8.9% | 73% | 0% | 4 |
* Part of a year: Sep 21 to the end of 2018, and 2026 to Oct 16.
Every variant, year by year
Does a setting win steadily, or in one lucky year? Each square is that year’s difference from SPY.
| Variant | 2018* | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026* | A year, whole period |
|---|---|---|---|---|---|---|---|---|---|---|
| Price to sales, top/bottom 20% (this site's rule) | +5.1 Price to sales, top/bottom 20% (this site's rule), 2018, the site's rule | −18.2 Price to sales, top/bottom 20% (this site's rule), 2019, the site's rule | −4.8 Price to sales, top/bottom 20% (this site's rule), 2020, the site's rule | −26.3 Price to sales, top/bottom 20% (this site's rule), 2021, the site's rule | +2.0 Price to sales, top/bottom 20% (this site's rule), 2022, the site's rule | +0.0 Price to sales, top/bottom 20% (this site's rule), 2023, the site's rule | +1.6 Price to sales, top/bottom 20% (this site's rule), 2024, the site's rule | −2.3 Price to sales, top/bottom 20% (this site's rule), 2025, the site's rule | −2.6 Price to sales, top/bottom 20% (this site's rule), 2026, the site's rule | −5.1 Price to sales, top/bottom 20% (this site's rule), a year over the whole period, the site's rule |
| Price to sales, top/bottom 10% | +0.0 Price to sales, top/bottom 10%, 2018 | −13.5 Price to sales, top/bottom 10%, 2019 | −7.4 Price to sales, top/bottom 10%, 2020 | −21.5 Price to sales, top/bottom 10%, 2021 | −0.0 Price to sales, top/bottom 10%, 2022 | +0.0 Price to sales, top/bottom 10%, 2023 | −0.0 Price to sales, top/bottom 10%, 2024 | −0.0 Price to sales, top/bottom 10%, 2025 | −2.6 Price to sales, top/bottom 10%, 2026 | −5.3 Price to sales, top/bottom 10%, a year over the whole period |
| Price to sales, top/bottom 30% | +5.1 Price to sales, top/bottom 30%, 2018 | −18.2 Price to sales, top/bottom 30%, 2019 | −4.8 Price to sales, top/bottom 30%, 2020 | −28.8 Price to sales, top/bottom 30%, 2021 | +11.9 Price to sales, top/bottom 30%, 2022 | +0.0 Price to sales, top/bottom 30%, 2023 | +8.6 Price to sales, top/bottom 30%, 2024 | −1.9 Price to sales, top/bottom 30%, 2025 | −9.9 Price to sales, top/bottom 30%, 2026 | −4.1 Price to sales, top/bottom 30%, a year over the whole period |
| Price to earnings, top/bottom 20% | +0.0 Price to earnings, top/bottom 20%, 2018 | −5.6 Price to earnings, top/bottom 20%, 2019 | −18.9 Price to earnings, top/bottom 20%, 2020 | −27.0 Price to earnings, top/bottom 20%, 2021 | +0.0 Price to earnings, top/bottom 20%, 2022 | +0.0 Price to earnings, top/bottom 20%, 2023 | +1.9 Price to earnings, top/bottom 20%, 2024 | −2.4 Price to earnings, top/bottom 20%, 2025 | +8.3 Price to earnings, top/bottom 20%, 2026 | −5.3 Price to earnings, top/bottom 20%, a year over the whole period |
The settings, tested on a grid
How expensive and which measure: return against SPY
Each square: how much more (green) or less (red) a year SPY-or-T-bills returned than SPY. Rows: bearish when the median valuation of the 500 largest is above that share of all earlier readings; columns: the measure.
| Measure → | |||
|---|---|---|---|
| Bearish when more expensive than ↓ | Price to sales | Price to earnings | Average |
| 60% of readings | −5.6 Bearish when more expensive than 60% of readings, measure Price to sales | −8.4 Bearish when more expensive than 60% of readings, measure Price to earnings | −7.0 |
| 70% of readings | −4.1 Bearish when more expensive than 70% of readings, measure Price to sales | −10.4 Bearish when more expensive than 70% of readings, measure Price to earnings | −7.2 |
| 80% of readings | −5.1 Bearish when more expensive than 80% of readings, measure Price to sales, the site's rule | −5.3 Bearish when more expensive than 80% of readings, measure Price to earnings | −5.2 |
| 90% of readings | −5.3 Bearish when more expensive than 90% of readings, measure Price to sales | −3.2 Bearish when more expensive than 90% of readings, measure Price to earnings | −4.2 |
| 95% of readings | −5.7 Bearish when more expensive than 95% of readings, measure Price to sales | −0.8 Bearish when more expensive than 95% of readings, measure Price to earnings | −3.3 |
| Average | −5.2 | −5.6 | |
How expensive and which measure: how much smaller the worst fall was
Each square: SPY's worst fall minus the strategy's, in points (green: it fell less). Rows: bearish when the median valuation of the 500 largest is above that share of all earlier readings; columns: the measure.
| Measure → | |||
|---|---|---|---|
| Bearish when more expensive than ↓ | Price to sales | Price to earnings | Average |
| 60% of readings | +17.6 Bearish when more expensive than 60% of readings, measure Price to sales | +14.4 Bearish when more expensive than 60% of readings, measure Price to earnings | +16.0 |
| 70% of readings | +14.5 Bearish when more expensive than 70% of readings, measure Price to sales | +5.4 Bearish when more expensive than 70% of readings, measure Price to earnings | +9.9 |
| 80% of readings | +10.3 Bearish when more expensive than 80% of readings, measure Price to sales, the site's rule | +5.4 Bearish when more expensive than 80% of readings, measure Price to earnings | +7.8 |
| 90% of readings | +5.4 Bearish when more expensive than 90% of readings, measure Price to sales | +5.4 Bearish when more expensive than 90% of readings, measure Price to earnings | +5.4 |
| 95% of readings | +5.4 Bearish when more expensive than 95% of readings, measure Price to sales | +5.4 Bearish when more expensive than 95% of readings, measure Price to earnings | +5.4 |
| Average | +10.6 | +7.2 | |
The two halves of the history
The best settings found over the whole period, and how each did in 2017–2021 and in 2022–2026 on its own. A setting that only works in one half is fitted to the past.
| Setting | Whole period, a year | 2017–2021 | 2022–2026 | Worst fall smaller by | Ahead in both halves |
|---|---|---|---|---|---|
| The site's rule, but price to earnings, bearish above 95% of readings | −0.8 whole period | −2.1 2017 to 2021 | +0.0 2022 to 2026 | +5.4 worst fall | No |
| The site's rule, but price to earnings, bearish above 90% of readings | −3.2 whole period | −7.9 2017 to 2021 | +0.0 2022 to 2026 | +5.4 worst fall | No |
| The site's rule, but bearish above 70% of readings | −4.1 whole period | −13.1 2017 to 2021 | +2.4 2022 to 2026 | +14.5 worst fall | No |
| The site's rule, but bearish above 90% of readings | −5.3 whole period | −12.2 2017 to 2021 | −0.6 2022 to 2026 | +5.4 worst fall | No |
| The site's rule, but price to earnings | −5.3 whole period | −15.2 2017 to 2021 | +1.6 2022 to 2026 | +5.4 worst fall | No |
| The site's rule, but bearish above 60% of readings | −5.6 whole period | −11.3 2017 to 2021 | −1.6 2022 to 2026 | +17.6 worst fall | No |
| The site’s rule | −5.1 whole period, the site's rule | −12.3 2017 to 2021, the site's rule | −0.1 2022 to 2026, the site's rule | +10.3 worst fall, the site's rule | No |
Summary: the settings that helped the most
- Best single setting tested: the site's rule, but price to earnings, bearish above 95% of readings: −0.8 points a year over SPY (−2.1 in 2017–2021, +0.0 in 2022–2026), against −5.1 for the site’s rule. Found by looking at the results, so it is the most flattering number here, not a forecast.
- Bearish when more expensive than: 95% of readings did best on average (−3.3), 70% of readings worst (−7.2).
- Measure: made little difference (averages within half a point).
- Choosing the best setting in advance: the setting with the best result in 2017–2021 (the site's rule, but price to earnings, bearish above 95% of readings, −2.1) scored +0.0 in 2022–2026, against −0.1 for the site’s rule; 5 of the 10 settings tested beat the rule in those later years.
The site keeps the rule it published, so its live record stays honest. The heat maps show which ingredients mattered across many settings; any one best square is partly luck, because the history holds only a handful of real declines.
Live record
The rule went live after the close of Oct 16, 2026. Every reading since was made by the daily run after that day’s close and is kept exactly as made; the newest few are corrected only if late price data changes them.
No live readings yet: the first comes after the next trading day.
Free · every Friday after the close
Know when the market’s underlying health changes
Every Friday, a two-minute report on market health, rising risk and the indicators that changed, without having to watch every chart yourself.
- The health score and the top-risk score, and how far each moved
- Every indicator that turned bullish or bearish, and why
- Whether breadth confirmed the S&P 500’s new highs
- The charts that matter, in under two minutes
From the same author
Bull Rhythm: momentum strategies, tracked live every trading day
Eight model stock portfolios built on 12-1 momentum, one of the most researched return factors in finance, run by fixed rules and measured against the S&P 500.
- Every holding and every trade published, with the reason in plain words
- The live record since go-live, next to a backtest since 2017
- The Bull Rhythm Weekly by email every Friday