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(6/3/17)
At this point it seems like the market will rise forever and go
to infinity. In terms of "Real Dollars" the S&P remains above the top of
its longer term upward channel (red line). Furthermore there have only
been two other occurrences in which it has been this far above the upward part
of the channel. The last time was in the late 1990's and the other
way back in the mid 1830's. If the S&P were to rise above the top of
its upward channel, similar to the prior two events, it would have to reach the 2600 range which is another 7%
higher from current levels. That doesn't mean it has too but we have to be
open to that possibility.
Meanwhile, as I have mentioned before, the long term outlook for
the market hasn't been favorable when the S&P has risen well above the top
of its upward channel. In the prior two events substantial corrections
followed (points A to B) with an eventual drop back back below the longer term
mean (green line). Currently the long term mean is just above the
1000 level (point C). I know it seems like the market is going to go up forever
however history suggests it won't.
Finally there is one last thing I would like to point
out. In early 2009 many were surprised that the S&P bottomed and
didn't go even lower. However, in terms of "Real Dollars",
notice the S&P had dropped back to where it peaked in the late 1960's (point
D). In my opinion this was a major reason why the
S&P bottomed in early 2009.
Amateur Investors
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