SP500 at all time highs…1600 target!!! It’s possible
Yes, it seems everyone is bullish about the markets these days. Then we have Laszlo Birinyi who's been a super bull predicting S&P at 2854 . Here's a great article from Bloomberg discussing factors that could keep the rally going.
Some of the Factors listed:
Previous Bull Markets
Even after almost doubling in 24 months, the S&P 500’s two- year return is about 36 percentage points below the average bull-market gain of 131 percent since 1962, according to data compiled by Bloomberg and Birinyi Associates. The 730-day rally without a decline of 20 percent or more compares with an average duration of 1,407 days, the data show
Profit Growth
Five straight quarters of U.S. profit growth and the biggest yearly increase since 1988 have held down valuations…The U.S. benchmark index is trading at 15.5 times reported earnings, compared with the average ratio of 19.7 at bull-market peaks.
Major Expansion’
S&P 500 companies will boost earnings by 17 percent during the next 12 months to a record $99.82 a share, according to analyst estimates
So is it possible for SP500 to hit all time highs
The Charts indicate that it is indeed possible. Back in Dec 2010, I posted an article suggesting that SP500 could hit 1330 next year (2011). Well, we achieved that target.
For 2011 and beyond. SP500 looks like it's headed for it's all time highs. Posted below is a Monthly Chart of the SP500 going back to 2007 high of 1576.
Chart Interpretation
What you're seeing on the chart is called a measured move, where the 1st leg is (666 to 1219) followed by a correction back to 1010 (38% retracment) and the 2nd leg is exactly the same as the 1st leg (projecting target of 1576 or above from 1010).
Ofcourse, the markets do not go up in a straight line. Could we see all time highs this year, it's possible. It's also possible that the whole rally could derail.
I want to be clear – Forecasting Markets is very difficult to do, all we can do is consider possibilities. This possibility of SP500 hitting all time highs is firmly ingrained in my head. So, I will trade on the long side until the market conditions change. so, keep this chart in mind.
