Market peak of everything - evidence that the stock market has already peaked

The broad selling of the stock market continues. Is this just another dip or has the market already peaked? The overwhelming evidence suggests the latter:

1. The margin debt has peaked. The margin debt reached historic high of 2.7% of US GDP on February 2014. The margin debt peak has preceded the last two major stock market peaks in 2000 and 2008 by a few months.

Source: NYSE

 2. Value of equities relative to GDP peaked in Q2 2014. This indicator has not turned down decidedly but this may be just a matter of time.

Source: FRED

3.Similarly, the household allocation to equities reached high in Q2 2014 (22% of all household assets is in equities). The equity allocation has been higher only once in 2000. In other words, there is no cash on the sidelines; the households are all in.

Source: FRED

4. The inverse of credit spread peaked in May 2014 and has decidedly broken down. This has been a good leading indicator to stock market.

Source: FRED

5. Corporate profits as percentage of GDP (a proxy of profit margin) peaked in Q3 2013.

Source: FRED

6. The corporate cash flow peaked already in Q4 2011 and has not increased since.

Source: FRED

7. The major stock markets around the world are going down in unison.

8. As are the stock indexes in US.

In summary, there is overwhelming evidence that the stock market has already peaked. Given the excessive valuation, it is likely that the market may go down significantly over the next 6 to 12 months.