Three big questions

Sometimes focusing on just a few big questions can help put things in perspective. Here are three worth asking:

 Is the primary trend bullish or bearish? The Dow Industrials and Dow Transports reached all-time highs in February, confirming the bullish primary trend. Since then both averages have seen significant corrections and rebounds, but only the Transports have moved back above their February high.

 Are stocks too expensive? While the S&P 500 Index has surged since year-end 2024, so have earnings expectations. As a result, the average and median P/E ratios for S&P 500 stocks are lower than year-end 2024 levels based on both expected current-year and next-year earnings.

 Are investors getting carried away? Signs of speculation are easy to spot, including big gains in unprofitable, hyped-up stocks. But surveys of individuals, investment newsletters, and Wall Street strategists are far from bullish extremes.