57% of the Dow 30 stocks are in down trend, which has been trending since June '99. The actual Dow chart has been going sideways, but now the breakout is down. This index could still work lower.

What we're doing and how to use this index.

When is a stock market too high or too low ? For the New York Stock Exchange, using the Dow 30 stocks, we've compared each of their closing months price with that of past closing prices to determine their trend. Each month the number of stocks up is then plotted as a percentage, on the index you see here.

Before the market makes the top of its bull run, our bubble index should top out above 90%; ie 90% of the stocks being measured would be in upward momentum - rising - so the odds of further profit potential are not on our side. And it is at such times that all the good news will be coming out. Theoretically at least, as a bull market progresses, buying will tend to become concentrated in fewer and fewer larger cap stocks, which should be reflected in our bubble index here.

So;
The Dow has a long history. You can see how each time our bubble index went above 90% a correction followed a few months later. Where such a long history is involved, this is as good an indicator of market valuation as one could get.