We haven't updated our Big Chart since mid 2012 but we've finally cleared the top of the NYSE's range and it's time for us to ratchet up our expectations for this rally.
As you can see on our current Big Chart, our mid-point targets were 16,000 on the Dow, 1,600 on the S&P, 3,300 on the Nasdaq, 10,000 on the NYSE and 1,000 on the Russell.
As with all our 5% Rule™ ranges, we allow for 10% overshoots but, at this point, 4 of our 5 indexes have made it and now it's time to redraw our lines, adjusting for things like the Dollar, changes to the Index Components and volume consolidations we've seen in the past two years.
As you can see, we were right to be skeptical in 2012 and we ultimately had our 10% pullback but that then triggered QE3 from the Fed, which has since become QInfinity and they pretty much haven't let the market have a proper pullback since. We did have a quick dip this January but if you blinked – you missed that one and the Russell and Nasdaq faltered in March, but promises of more QE have them back on track now as well.
The small correction we had last summer gives us a decent consolidation point 20% below our current levels, but those are our Must Hold lines. The question is, if this rally is real – what do we expect out of it? The easy answer is not much. Without the constant infusion of Fed funds, we'd never be this high in the first place. Of course, when I say Fed, I mean all Central Banks, as 60% of the S&P's revenue now comes from outside the US.
IN PROGRESS
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This entry was posted on Monday, June 23rd, 2014 at 4:26 am and is filed under Uncategorized. You can leave a response, or trackback from your own site.
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