S&P has been in a range since 1997. Range represented by upper and lower green lines. Black dotted lines represent return to the breakout zone. Some play the breakout itself and in 2013 that was a good bet. Obviously 2007 didn't work out so well and neither did 2009. 2013 though there were lots of buyers and if we simply give any credence to the old adage that old resistance becomes new support etc then we all have something to look forward to when S&P returns to the breakout zone. When is this going to happen? Who really knows, could be 2 months could be two years. Bear in mind also the two previous tops back in 2000 and 2007 both took about a year to actually happen and one bloody week does not a top make, not even a bloody month in the case of the S&P. It took what 16 years to get an actual breakout? Even if markets roll over and turn down for us just think of the support area it is coming into. Depending on ones definition of "Crash" i personally don't see this market ever getting below 1400 again in my life time.
Comentarios
JamesPowell
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if we treat this like a break out it should be a hell of a trade when it gets back to the break out level lol
JamesPowell
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I have been hearing and seeing comments and news on the markets, particularly the S&P. A "crash" is eminent etc. Thing is how do you know? Anyone can guess i suppose and be lucky or right. Gold seems to be going out of business and the S&P seems headed to the moon. Up at newer and newer highs though there is nothing to compare the S&P to way up here. I mean you can play the S&P off the NASDAQ because it still has data to the left to look at. The Russell does too. But what about gold? I have no proof but gold currently has a negative correlation to the S&P. If you look at a monthly or weekly chart of gold you will find some very strong support, a floor if you will, around 1000ish level. This matters to me, because if there really is a correlation between gold and the S&P then when gold finds that floor i suspect the S&P will have found its ceiling.
KrunchieKilleen
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SPX500 broke out of this range in Jan 2013. Its new range is guessed by joining the bottoms from 1991 throught the 2009 bottom, which is taken to be 800. Draw a parallel Resistance Line throught the 2000 top and we see that we are now touching the top of the range. A collapse is imminent, and the new bottom will be 1350.
JamesPowell
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thanks for your comments. I have no argument for you guy, you may be totally correct in your beliefs. Personally, and i cant prove it, but i believe this market will continue to go up until gold finds a floor. I believe golds floor is around 1000ish and we are not to far away from that. I believe the USD is baseless and worth about 25 cents so it probably does not matter in the equation. I will say this, when the banks and institutions decide it is time for it to come down, its coming down. When that is i couldnt say with any certainty, though i believe it related to gold. Based on the old rule of old resistance becomes new support i say it wont collapse as folks think it will. I think i stated $1400 earlier. The financial markets will pull back when the banks can no longer talk the people into buying these stocks. LOL
stockSMASH
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THe nature of your reply leads me to believe you understand the game. Markets rise and markets fall and why they do don't matter at all.... ride the wave and let it go before it crashes and you eat crow. I am up at 3 am and test my algo lines against the German DAX... most every business morning... then a 6am I am swimmming, on the water on my OC-1 or teaching a 7 am MMA class. Keeps things in perspecitve. I viewed Mosler's interview. Insight into the mortgaging of the future generation will be the single biggest failure of our time sans war. Lets hope the next generation can do better. Have you heard that there is an almost working Fusion reactor in California? no bull,,, CHECK OUT TED talks. Perhaps technology that changes the world can help change the very fabric of what supports this 'system'.
JamesPowell
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Do you really see any other way out of Americas financial mess really? I mean the dollar is obsolete really. At least on a national level. Inflation is astronomical. Only way ever to even get close to catching up is admit it's all a charade, apply MMT at the national level, eliminate all federal taxes leaving working class America with most of their "pay" to do with as they please. Just for starters. Other thing is America has to invent something revolutionary, we have squeezed an awful lot of milk out of this computer cow. We have to come up with a new industry to put America back to work. Something besides another war. Modern wars with third world countries do not create jobs. The world economy is in a funk. Someone has to lead us out of it. Who will it be you think?
stockSMASH
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I am not sure you are clear on what got us here, QE free money for 5 years and interest rates so low for so long that something is wrong. The entire globe is printing, and EU now considering.. and soon, perhaps a year, perhaps more or less, there will be hell to pay for these policies. Nobody knows because the model has never been tested. But make no mistake, when the drug stops pumping, and a trigger sets it off, you may see in your lifetime something terrible, the results of too much manipulation of the markets and the "coming to the mean' as they say... reality finds it's way to the truth. Been a great run... be careful.
JamesPowell
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hello biff, you are correct, i have no clue what got us here. Its all the land of OZ to me. I don't believe in any of it frankly. The system works fine so long as the masses never figure out what is really going on. Dont matter what got us here, i wish i knew then what i know now though. Ah but now i know how to make money both ways so i don't care if or when it all does come tumbling down. Pays the same to me. Fact down usually pays faster than up.
Thing is though, and ill see if i can find you a nice example. I looked at the chart on a big time frame and simply noted hey, this is just one big "breakout". Wow took 16 years to make it but its still one big range bound market them Bam!!! a breakout. Now, some folkes, maybe even you do it, some folks buy the breakout. Not me. I buy only the pullback to the breakout.
I need the market to come back to its mean like a junkie needs crack. LOL Thats a fact. Why or how it gets there don't matter to me really. If it shoots past my mark, still no biggy really. If you think about it and im on the train heading south its actually better for me if i miss my stop. If however i get off at the station i mentioned to begin with and the market continues south without me that ok too.
If you have a few minutes go search this on YouTube youtube.com/watch?v=JGuNpqYBkZk Im go ahead and send this reply. Then see if i can find you a nice breakout chart.
Lynx
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Interesting perspective, but don't let the (almost) permanently high plateau of the past 15 years deceive you. The mean to which you need the market to come back is now at just below 1400. With just a little undershoot you will see this market well below 1400. The link is a to "fair value" calculation for a 10% yearly return, assuming dividends would grow 7% per year forever (which has never happened). It was made in 2005 and yielded 777. Extrapolating to 2014 it would result in 1375 (9 more years at 6.5%/annum increase in valuations). hussmanfunds.com/wmc/wmc050912.htm