The stock market rally coming off March lows has now surpassed 60%, a rally of strength rarely seen before. But it has been seen before, so let's put it into perspective.
* Year over Year Retail Sales: 9.3% average in prior 60% rallies versus -5.3% in the current one
* Consumer Confidence: 95.5 average; 53.1 now
* Capacity Utilization: 79.9% average; 66.6% now
* Year over Year Industrial Production: 4.1% avereage; -10.7% now
* ISM: 53.9 average; 52.6 now
* Payroll employment gains over period: 2.2% average; -2.0% now
* Decline in continued unemployment claims from cycle peak: -26.3 average; -11.6% now
* Year over Year growth in total credit market debt: 9.3% average; 3.0% now
* Year over Year growth in household debt: 8.8% average; -0.1% now
* P/E Multiple: 16.8x average; 20.0x now
In other words, the fundamentals cannot justify this rally.
But these aren't the only ways that you can measure this rally. Another way to do it is on a relative basis based on its recent performance.
On the valuation front, stocks are presently overvalued, but to levels that we've observed at least several times in history. The anomaly relates to market action, where we can no longer find a single historical instance where stocks were more overbought on the combination of short- and intermediate-term measures we respond to most strongly. Indeed, only one instance comes close, which is November 28, 1980.
That date is not very well known, mostly because it was so short-lived. The rally was coming off the 1980 recession and was based on "less bad" news, much like today's. That rally quickly died as the country headed into the 1982 double-dip recession.
As for the present, we have rarely seen 90% of stocks suspended above their 50- and 200-day moving averages for as sustained a period as we have now observed.