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This is the ratio of S&P500 Index relative to the US M2 money supply. Often called the Stock-to-Money ratio.

The NASDAQ index & S&P500 have gone up a lot more relative to the money supply. https://fred.stlouisfed.org/series/WM2NS the money supply has gone

Both SPX and M2 generally rise over time (since the money supply increases over time, the stocks should rise in theory).

But they don't grow at the same rate or at the same time. The ratio captures that divergence.

When stocks outpace money printing, the ratio rises (market is expensive). When money printing outpaces stocks, like after a crash, the ratio falls (market is relatively cheap).

You can also infer, is the stock market gaining real purchasing power value over time, or is it just floating on newly printed money.

It is important to note that it is not a market timing indicator. It should not ever be used to predict short term market trends.

There are lots of other factors at play here as well (like MAG 7, S&P 500 today is heavily concentrated in a handful of mega-cap tech companies). Markets can stay expensive for years, even decades, don't use it for trading.

This is the ratio of S&P500 Index relative to the US M2 money supply. Often called the Stock-to-Money ratio.

The NASDAQ index & S&P500 have gone up a lot more relative to the money supply. https://fred.stlouisfed.org/series/WM2NS the money supply has gone

Both SPX and M2 generally rise over time (since the money supply increases over time, the stocks should rise in theory).

But they don't grow at the same rate or at the same time. The ratio captures that divergence.

When stocks outpace money printing, the ratio rises (market is expensive). When money printing outpaces stocks, like after a crash, the ratio falls (market is relatively cheap).

You can also infer, is the stock market gaining real purchasing power value over time, or is it just floating on newly printed money.

It is important to note that it is not a market timing indicator. It should not ever be used to predict short term market trends.

There are lots of other factors at play here as well (like MAG 7, S&P 500 today is heavily concentrated in a handful of mega-cap tech companies). Markets can stay expensive for years, even decades, don't use it for trading.

This is the ratio of S&P500 Index relative to the US M2 money supply. Often called the Stock-to-Money ratio.

The NASDAQ index & S&P500 have gone up a lot more relative to the money supply. https://fred.stlouisfed.org/series/WM2NS the money supply has gone

Both SPX and M2 generally rise over time (since the money supply increases over time, the stocks should rise in theory).

But they don't grow at the same rate or at the same time. The ratio captures that divergence.

When stocks outpace money printing, the ratio rises (market is expensive). When money printing outpaces stocks, like after a crash, the ratio falls (market is relatively cheap).

You can also infer, is the stock market gaining real purchasing power value over time, or is it just floating on newly printed money.

It is important to note that it is not a market timing indicator. It should not ever be used to predict short term market trends.

There are lots of other factors at play here as well (like MAG 7, S&P 500 today is heavily concentrated in a handful of mega-cap tech companies). Markets can stay expensive for years, even decades, don't use it for trading.