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What I'm looking at - ISM PMI, Shiller PE Ratio

by Sentimentrader
2026-07-06
While six months of expansionary ISM PMI data suggests economic resilience, the Shiller PE ratio has breached the critical 40 threshold. Historically, this dot-com level of overvaluation triggers severe near-term market corrections.

Key points

  • The ISM PMI Index has registered expansionary readings (above 50) for six consecutive months, a momentum signal that historically precedes a positive trend for the S&P 500.
  • Despite this economic resilience, the Shiller PE Ratio has breached the critical 40 threshold, pushing the market into a dangerous valuation regime last seen during the dot-com bubble.
  • Historically, when valuations stretch to these extremes, equities face severe headwinds over the near term, heavily skewing the one-month risk/reward profile to the downside.

The PMI Index overview

This indicator tracks the ISM PMI Index. The PMI measures the health and overall trajectory of the United States' manufacturing sector. It functions on a scale between 0 and 100, where a print above 50 signals expansion and a print below 50 denotes contraction.

What I'm looking at - ISM PMI, Shiller PE Ratio

Per Investing.com:

The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. For each of the indicators measured (New Orders

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