What Have The Markets Done & Where Can We Be Heading?

First off, I’m glad to be blogging again. It’s been awhile.

Since this is my first real post back, I want to take a look at the general US equity market. We’ve had some wild moves this year and I want to see if that’s done any major damage for the long-term view. My view has been that we’ve been in a bull market since we bottomed in 2009. We’ve seen multiple corrections and pullbacks, but the matter of the fact remains – the trend is still up.

Let’s take a look at the monthly chart of the S&P 500 ETF ($SPY).

SPY Nov 8


One thing you notice here is the monster breakout above the ~155 level.  We broke out and didn’t look book. Now, there’s no guarantee we never test that level again, but as of right now, things are looking good for the bulls. Last year’s October correction barely registers as a small blip here. This year’s late summer correction is more noticeable, but as of now, we’re closer to making a new all-time high than from making a new multi-year low.

Given that December seasonally is a bullish month for equities, I won’t be surprised if we’re at new all-time highs as we cross into the new year.

The one thing I was looking for during this last correction was for a lower high to hold and fail. All the previous pullbacks and corrections we’ve had since the 2009 bottom have been followed by strong bounces. Some took a little longer than other, but we have yet to experience a selloff that fails to make a new high within a reasonable amount of time. And from the looks of it, it doesn’t seem like we’ll experience that this time around either – given how close we are to the all-time highs.

And for those who look at this chart and conclude “we’ve only gone straight up”, are looking at this all wrong. For a year, the market has gone nowhere. So not only have we corrected via price, but also through time. That’s a deadly combo for the bears in my opinion.

The “grind up” market is not dead – yet.

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