<English> Is the S&P 500 Approaching a Cyclical Peak?

Valuation metrics such as the Cyclically Adjusted Price-to-Earnings (CAPE) ratio and the Buffett Indicator are trading near historical extremes. These elevated readings indicate that U.S. equities are priced at exceptionally rich valuation levels, heightening the probability of a valuation-driven correction. The question is whether the market’s long-term structural trend corroborates this risk.

An analysis of the S&P 500 since 1932 reveals that the index has spent approximately 95% of its time within an upward-sloping logarithmic regression channel, bounded by two standard deviations (±2 SD).

The S&P 500 is currently trading between +1 and +2 standard deviation zone, approximately 1.5 SD above its long-term trend line. Historically, the index has occupied this elevated territory less than 15% of the time, underscoring how stretched current price levels are relative to long-term structural expectations.

From a mean-reversion perspective, this substantial deviation from the long-term trend suggests that corrective pressures are statistically accumulating. However, it is essential to acknowledge that strong, momentum-driven bull markets frequently extend well beyond fundamental fair value. Historically, markets have demonstrated the capacity to remain overbought for prolonged periods before a sustained, meaningful reversal finally emerges.

Within the confines of the long-term regression channel, it remains plausible that the index could advance further toward the upper boundary (+2 SD) before entering a consolidation or retracement phase. If this extension materializes, the upper channel limit implies a potential upside target near 7,700 on the S&P 500, representing at most an estimated 12% additional upside from current levels.

In summary, based on nearly a century of structural trend analysis, the S&P 500 appears to be in the process of forming a cyclical top. This short-term peak could realistically materialize anywhere between current levels and the 7,700 threshold, after which an adjustment (mean-reversion) phase would be statistically anticipated. Nevertheless, as long as the S&P 500 remains confined and advancing within this established logarithmic channel, the long-term upward structural trend remains intact.