Chart of the Day - Wednesday, April 21st, 2021

Today’s Chart of the Day was shared in a note by Nick Reece of Merk Research (@nicholastreece). While there are definitely signs of excessive optimism in the markets, Nick explains that the S&P 500 is not in bubble territory yet. In the note, Nick wrote, "The term "bubble has lost its meaning from overuse; so I've chosen four well-known market crashes and worked backwards from there. I've used 1929, 1987, 1999/2000, and 1989 Japan. I've chosen a simple indicator for market performance: the % above its 10-year moving average. All four crashes occurred after the market was well above 100% of its 10-year moving average (120% was the lowest common threshold). The S&P 500 is not yet at levels consistent with 1929. 1987, 1999/2000, or 1989 Japan, but it's getting closer. For now, comparisons to those manias are still premature."