Another typical symptom of a rising market are the decreasing yields on equities. When stock prices are rising faster than the companies ability to raise the dividend, the yield will begin to fall. That decreasing yield may just be telling the astute investor that the market is getting a little bit too expensive.
At some point the prudent investor has to wait for value to re-enter the market before once again committing funds.
As can be seen in the chart to the left, the historical S&P500 has a mean average of 15.51 and a median average of 14.55. Today the S&P500 is quoted at 19.47 times earnings. This is 25% above the historical mean.
In order to keep from falling into this trap, it's prudent for investors to adhere to their individual guidelines and therefore become more selective in choosing investments. The result of increasing investment discipline is always a shrinking pool of buy candidates, which is what I'm seeing in my research today.
Fortunately for investment researchers, there's always a few candidates to buy even in the worst of times. As I find them I'll write about them here on this website. In the meantime I'll continue to buy stocks from that shrinking pool.
Good Luck and Good Trading.