Description
The SPY Institutional PE (Top 20) is a powerful macro-analysis tool designed to provide a real-time "Under the Hood" look at the valuation of the S&P 500. Instead of looking at the SPY price in isolation, this indicator calculates a Weighted Price-to-Earnings (P/E) Ratio based on the Top 20 institutional holdings that drive the market.
By aggregating the fundamental data (EPS TTM) and real-time prices of market giants like AAPL, MSFT, NVDA, and AMZN, this indicator offers a clearer picture of whether the broad market is becoming overextended or undervalued from an institutional perspective.
Key Features
1. Weighted Institutional P/E Calculation
The indicator doesn't just average the P/E ratios; it uses a Weighted Earnings Yield (E/P) methodology. It assigns specific weights to the Top 20 components of the SPY (reflecting their actual market influence) to derive a unified "Institutional P/E" curve. This helps you identify macro trend exhaustion when the aggregate P/E reaches historical extremes.
2. Real-time Fundamental Dashboard
The built-in table provides an instant health check of the market leaders, including:
Symbol List: The Top 20 stocks by market cap/weight.
EPS (TTM): The actual Trailing Twelve Months Earnings Per Share for each company.
Individual P/E: The current valuation for each giant.
Visual Alerts: Cells are highlighted in Red if a company reports negative earnings, signaling fundamental weakness in that sector.
3. Macro Sentiment Analysis
Use the plotted P/E line to gauge market sentiment:
Rising P/E Line: Indicates the market is paying more for each dollar of profit (Multiple Expansion).
Falling P/E Line: Indicates the market is becoming "cheaper" fundamentally (Multiple Compression).
Settings
Show EPS / PE Table: Toggle the dashboard on or off to keep your chart clean.
Table Position: Move the table to the Left or Right of your screen to suit your workspace layout.
How to Use
Market Tops: Look for instances where the SPY price is making new highs, but the Institutional P/E is spiking to unsustainable levels—this suggests a "valuation bubble."
Market Bottoms: Look for the P/E curve to flatten or drop significantly after a crash, indicating that value is returning to the Top 20 holdings.
Earnings Season: Monitor the table during earnings weeks to see which specific giants are dragging the weighted P/E up or down.
Note: This indicator uses request.financial and request.security to fetch data for 20 different tickers. It is best used on daily timeframes for macro valuation analysis.