> For the complete documentation index, see [llms.txt](https://docs.candelacharts.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.candelacharts.com/investing/market-valuation-and-on-chain/shiller-pe-ratio/confluences.md).

# Confluences

Valuations are most powerful when they converge with these macroeconomic and technical indicators.

* **Macroeconomic Cycles**: Compare CAPE levels with interest rate cycles; high valuations are often more sustainable when rates are low, but highly dangerous when rates begin to rise.
* **Price Action Structure**: Look for "Head and Shoulders" or other reversal patterns at the top of price action when CAPE is in the **Extreme Overvalued** zone.
* **Yield Curve Correlation**: Valuation extremes often precede economic shifts; a CAPE "Extreme Overvalued" signal combined with a yield curve inversion is a high-conviction warning sign.
* **Relative Valuation**: Compare the S\&P 500 CAPE to other asset classes or international markets to find the best relative value for capital allocation.


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