AI Summary
5 min readWhen analysts are most optimistic about earnings growth, that is the time to sell. Tom McClellan, editor of the McClellan Market Report, shows a chart from BCA Research that recently made the rounds on Twitter: analyst forecasts for S&P 500 earnings over the next three to five years have hit a multi-decade high. It looks like great news—earnings are the mother's milk of the stock market. But McClellan overlaid the S&P 500 price history on that same data and found the opposite. "Having a moment of high analyst earnings expectations is not a good condition for the stock market," he says. When analysts are most optimistic, that is when you want to be a seller. When they are most pessimistic, those are the bottoms. The forecasts are just a rearview mirror of whatever the market has been doing. A rising market makes people confident; a falling market makes them depressed and they cut their estimates. The new record in analyst optimism is not good news.
The S&P 500 vs. the Money Supply
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What you'll learn
- 1 (00:39) **Analyst Earnings Optimism as a Contrarian Warning** - Tom explains why record-high analyst earnings forecasts are actually a bearish signal, not a bullish one.
- 2 (03:20) **S&P 500 Divided by M2 Money Supply** - Tom introduces a valuation metric comparing stock prices to the total money supply, which has just broken the 2000 internet bubble record.
- 3 (05:20) **P/E Ratios vs. Bond Yields** - Tom explains why high P/E ratios are particularly dangerous when bond yields are also high.
- 4 (07:07) **NASDAQ's Extreme P/E and "This Time Is Different"** - Tom compares the current NASDAQ valuation to the 1999 internet bubble, warning against the same narrative trap.
- 5 (08:28) **Gold as a Leading Indicator for Interest Rates** - Tom presents a chart showing that gold prices lead interest rate movements by 20.5 months, and what it signals now.
- 6 (10:27) **Seasonal Weakness and the October 20th Buy Signal** - Tom outlines his short-term bearish and medium-term bullish trading plan based on seasonal and political cycles.
- 7 (11:49) **The 30-Year Cycle: Buy-and-Hold vs. Market Timing** - Tom explains a structural shift in market behavior that demands a change in investment strategy.
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Show Notes
Jul 30, 2026 – Is the stock market flashing warning signs even as analysts predict record earnings? Veteran market technician Tom McClellan joins Jim Puplava to explain why extreme optimism often signals a top, why valuations relative to money supply...
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