Valuation and fundamentals

10 period moving average of 18x forward earnings since 2/3/2017 has been:

2/3  2374, with SPX at 2297
2/10 2384, with SPX at 2316
2/17 2386, with SPX at 2351
2/24 2388, with SPX at 2367
3/3 2391, with SPX at 2383

High of the week was SPX 2400. Basically the valuation target zone I have been mentioning since last August shifting over to Thomson numbers from WSJ data has been tagged. But valuation is a funny thing. Right now my opinion is that forward earnings high in this bull market will be 18x-19x and not higher. But willing to say that this could be wrong, and it is the psychology of valuation that matters to the market. More on an interesting post here by Barry Ritholz. And while I start each weekend series with a quick look at valuation and fundamentals, it is price action that carries far more weight in my strategies. 

Due to 18x tag, I am downgrading valuation concerns to neutral. For the last year I've been saying mild positive because I thought there were room to go higher (but not too much higher). As long as numbers keep increasing the SPX can go higher while maintaining 18x. The pace of increases to the 18x level seems to be slowing so I may downgrade if the numbers start dropping. 

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Citigroup Economic Surprise seems to be slowing but still in decently positive territory. 

The two combine for mild positive.