Stock markets have reached new highs last week. The S&P 500 has climbed above 2000 for the first time and now sits right at our Top target at 2004. Further gains appear likely, but September and October are two months with a rather bad reputation and that may prompt investors to take some profits.
Let’s have a look at the current S&P chart (click for larger image):
The recent price action is very similar to what we got at the start of 2014. After a sell-off the market has swiftly climbed to new highs. Based on the trend channel a further climb to 2050 is feasible. But we have just entered a lunar red period and the Earl and MoM indicators appear to have turned down already. So, I think the market will first try to digest the recent gains.
A similar outlook is seen in the LT wave for September (click for larger image):
The wave did fairly well in August, marking the low early in the month and then climbing into a high on the 29th. Expected weakness in the middle of the month did not materialize.
For September the LT wave projects a period of weakness until the 20th, and a high on the 25th or 26th.
I have also updated the 1920s comparison chart (click for larger image):
The Dow Jones Industrials continues to mimic the price action of the 1920s very closely. We are now approaching the point where the market took off after almost a year of sideways consolidation. So, it will be interesting to see what happens.
I have a low in 2015 based on the 17.6 year stock market cycle (either March or September, I favour March) and the start of a new secular bull in 2017/8.
As you know I believe 1929 = 1965 = 2000 and we are presently around 1979 where 1974 = 2009 in the 1965 to 1982 secular bear market.
I was 100% long until Monday, now I have 37% cash. Looking for a correction into mid Oct, maybe the start of a bigger move bottoming March 15. But we have to wait and see how things unfold.
Have you read my book? I can send you a review copy if you would be prepared to write a review on your blog?
Nice to hear from you.
I have always planned to create a recommended reading page, but never go around to do it.
Maybe doing some book review is the push I need. I will happily review your book, but not before mid October, as I will be too busy in the coming month. Is your book in Kindle format?
Yes it is
If you can DM me on twitter with your email address I’ll ask my publisher to send you a code for a review kindle copy.