Equities are currently over-bought based on most short-term momentum oscillators. As evidence, the chart below shows the number of constituents trading above their 50-day moving average. We have just experienced record highs (or near all-time highs) for all developed markets around the world.

The number of constituents trading above their 50-day moving average.

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The number of constituents trading above their 50-day moving average.

In addition to being over-bought on a short-term perspective, valuations are becoming a huge concern.

Our second chart shows the U.S. market is currently the most over-valued since the dot-com era (based on forward P/E ratios for the S&P 500).

S&P500: Trailing and Forward P/E ratios

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S&P500: Trailing and Forward P/E ratios

Is this a bubble?

If markets are over-priced and over-bought, you have to be concerned about being in a bubble. Yet, most positioning indicators suggest hedge funds and long-only institutional equity managers have not fully participated in the equity rally. 

Our final chart shows investors are sitting on the biggest pile of cash ever.

Cash Balances: ICI Money Market Fund Asset

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Cash Balances: ICI Money Market Fund Asset