References in the chat room to targets for the S&P cash index are well worth addressing. The 1551 target I was using was not exactly chopped liver, since on the daily chart, it took the S&P 500 nearly ten months to get there. The target was touched for the first time on March 8, and there’s no getting around the inference that price action since then looks like a shallow consolidation. This means we need to move to a chart of higher degree, and so I’ve used the monthly chart to project a target at 1637.00 that is good enough for government work. (A=605.88 on 7/31/96; B=1576.09 on 10/31/07; and C=666.79 on 3/31/09)
This is not a high-quality pattern, to be sure, since there was a massive correction to a second point C in 2007-09. Also, the tiny point A is sketch, analytically speaking. However, the pattern will suffice for purposes of relying on 1637.00 as a minimum upside target. We should also expect this Hidden Pivot to show a little stopping power. Shifting ‘A’ back to a small but important low at 605.88 recorded on 12/30/94 yields a D target at 1800.00. That’s the number I would suggest that you keep most clearly in mind if bulls continue to rampage.
This prospect seems astounding to me, given the powerful economic headwinds from Obamacare, stagnant real incomes and a government-employee pension/healthcare catastrophe that no longer lies ‘down the road’ — that has in fact arrived. Under the circumstances, I’ll be watching closely for signs of bearish impulsiveness on the charts. On the daily chart at the moment, it would take a print at 1501.47 to bring this about. Nevertheless, I’ve designated this tout as ‘Actionable’ ($) because there is plenty of room to trade the rally, perhaps via a possible ‘camouflage’ breakout opportunity on a pullback from above the 1576.09 high from 10/31/07.