I'm always delighted when fundamental and technical analysis seem to align.

Over the weekend I posted my routine update of market valuation using the cyclical P/E10 as a fundamental indicator. Serge Perreault, whose technical analysis of the S&P 500 has become a regular weekend feature, saw the chart and sent me his annotated copy. He explained in the accompanying email:

Every time I look at that chart, I can't resist the urge to draw trendlines on it. This time, I realized that the latest P/E10 ratio of 21.8 is knocking on its downtrend resistance at a time when the market is overbought (RSI at a peak for both the S&P 500 and the DJIA in my three-year chart)!

Here's a link to Serge's latest weekend update with those S&P and Dow charts, and below is a close-up of those trendlines (click for a larger version).