Chart of the Week

S&P 500 current earnings(Blue), 200 week exponential moving average(Red) and 30 week rate-of-change(Bottom Green)



BOTTOM LINE: Earnings are improving at the fastest rate in over 40 years as illustrated by the bottom-half of the graph. This may explain the constant talk of bubbles and overvaluation. Analysts and pundits are behind the curve. The S&P's 04 P/E is 17.81(down 64.6% from its recent high) and falling almost daily. With interest rates near 46-year lows, corporate profitability at all-time highs, economic growth the fastest in 20 years, American household net worth at all-time highs, corporate spending improving and consumer spending remaining strong I would argue that the market deserves a premium valuation relative to past history.