I seem to be in “anecdotal mode” (as opposed to “quantitative mode”) of late, so why stop now? So how about a bold claim just to make it sort of interesting? OK, here goes:
*The only two prices that matter for the S&P 500 Index are 1972 and 2020
OK, “bold” might be a little strong. Maybe “argumentative” would be a better choice. In any event, take a look at Figure 1 below.Figure 1 – SPX and 1972 / 2020 price range (Courtesy: ProfitSource by HUBB)
As you can see in Figure 1 the 1972-2020 range has been the “battleground” range for some time now. In a nutshell:
*Anything that happens between 1972 and 2020 is essentially meaningless (UNLESS you are a short-term trader, in which case all kinds of trading possibilities arise).
*When price is above 2020 the possibility (seems like more of a “hope” at the moment) exists that price will trend higher, breakout to the upside and start a new bullish leg; OR if price momentum wanes while SPX is above 2020 then traders may consider the short side of the market.
*When price is below 1972 the possibility exists that price will trend lower, breakout to the downside and start a new bearish leg; OR if price gets too oversold while SPX is below 1972 then traders may consider the long side of the market.
Two other thoughts for longer term investors:
*As long as SPX is above 2020 we ARE NOT in a long-term bear market
*If SPX drops below 1972 then the danger of a long-term bear market increases