Other analysts’ views of the bigger picture:
Market Anthropology show this technical analogy with 2007 (below). What happened next? The beginning of the waterfall declines all the way down to March 2009. I don’t believe that’s where we are now, but the technical similarities are not in doubt. Analogies can work – e.g. the Mammis sentiment analogy played out in H2 2011 very well. Yet, 2011’s mid-year correction provided a similar close analogy with 2007’s top and subsequent action, which various analysts noted at the time, but eventually failed as the market rallied out of it late in 2011. But if the analogy below is to play out a little further, then we might look to 1400 as a potential target for the Sp500.
Source: Market Anthropology
Prometheus show a (proprietary) cyclical bull market top signal took place at the top at the start of April this year. They believe the cyclical bull in place since March 2009 has topped out. If that’s the case then we should not make a higher high, and 1400 might again be a suitable limit before renewed and deeper declines.
Source: Prometheus MI
On the other hand, a golden cross (moving averages crossing) that just occurred on the SP500 suggests significant advances ahead to new highs. This is coupled with a death cross on the Vix also just happening – a twin occurence that previously gave way to strong gains for stocks. When I draw in my main references (solar and secular positioning), this is more aligned to my predictions – new highs in equities in H2 2012, before we consider any new cyclical bear market.
Of course not all 3 chart predications can come good, but there is perhaps a little window here where they can unite in calling the index up towards around 1400 before they diverge.
Lastly, here are (i) stocks and (ii) bonds as a percentage of household assets (US) with my channel lines added. The message I suggest is that we are close to the end of the secular bear market in equities and the secular bull market in bonds or even beyond that point.
Underlying Source: Schwab
Laslo Birinyi’s historical analysis of equity bull markets looks like this:
He says that bull market generally have four quartiles, lasting around 410 days each. The biggest gains come in the first and fourth quartiles. He believes that from here stocks should make a siginificantly higher high accordingly in the fourth quartile which is soon to begin.
Here are my calcs for the 2009 bull:
Quartile 1: March 2009 – May 2010: 80% gain
Quartile 2: May 2010 – July 2011: 13% gain
Quartile 3: July 2011 – September 2012: the table average of an 18% gain would put the SP500 at 1593 by September this year
Quartile 4: September 2012 – November 2013: again using the table average for the fourth quartile, the Sp500 would be around 2200 by November 2013 which would mark the end of the cyclical bull (NB: Birinyi comes up with an ending level of 2100, which cross references with my calcs).
My take is that Nov 2013 is too far out, IF the solar maximum comes good in Spring 2013 (note Jan has been doing more solar work and estimates the solar max could occur Jan/Feb 2014). But as the calcs are based on averages clearly that could come in earlier but still generally fit with Laslo’s analysis.
I have highlighted the first two quartiles below.
If 1593 by September 2012 seems far-fetched, then note it would be achieved with a return to the top of the cyclical bull channel:
Again, all the predictions in this post can’t all come good. It’s up to you to work out which are the red herrings.