Why the markets will be much higher in 5 years?

[duarte]

I'll try to explain why S&P 500 will be much higher in 5 years.

 

(It's aguess, not a certainty.)

 

 

Chart 1 - S&P 500 index monthly candlestick chart between March 1964 and January 2013.

 

 

 

 

 

My guess about what is happening is that the S & P 500 since 2000 is following the path between 1968 and 1983.

 

This sugests that the S&P 500 may rise in the long term.

 

Chart 2 -The following chart shows the Price ROC indicator between March 1964 and January 2013.

 

 

 

 

 

 

The triple bottom pattern that the indicator did in 1994 was repeated between 2011 and 2012.

 

After the triple bottom pattern in 1994, the S&P 500 rose during 5 years.

 

This also suggests that the S&P 500 may rise in the long term.

[duarte]

After a long term analysis made, I will adopt a passive strategy of buy and hold.

For this strategy, I will now use 10 000 dollars and, maybe in one or two years' time,

I will use more 10 000 dollars.

 

I'll do this for each of the following risk profiles /ETFs:

 

Higher Risk / UPRO

Medium-higher Risk /SSO

Medium Risk / SPY

 

 

 

 

 

[duarte]

After a long term analysis made, I will adopt a passive strategy of buy and hold.

For this strategy, I will now use 10 000 dollars and, maybe in one or two years' time,

I will use more 10 000 dollars.

 

I'll do this for each of the following risk profiles /ETFs:

 

Higher Risk / UPRO

Medium-higher Risk /SSO

Medium Risk / SPY

 

 

 

About the risk:

 

The risk varies according to the leverage of the ETF used.

 

SPY is not leveraged. SPY is designed to have the same gain or loss as the S&P 500.

SSO is 2x leveraged. SSO is designed to have twice the gain or loss as the S&P 500 index.

UPRO is 3x leveraged. UPRO is designed to have thrice the gain or loss as the S&P 500 index

[duarte]

My guess is that the S&P 500 will rise to its resistance line, close to the level of 1575.

 

Chart - S & P500 index monthly candlestick chart between May 1999 and March 2013.

 

[duarte]

After a long term analysis made, I will adopt a passive strategy of buy and hold.

For this strategy, I will now use 10 000 dollars and, maybe in one or two years' time,

I will use more 10 000 dollars.

 

I'll do this for each of the following risk profiles /ETFs:

 

Higher Risk / UPRO

Medium-higher Risk /SSO

Medium Risk / SPY

 

 

 

In the first months of this year, the evolution of “buy and hold” portfolios was positive.

 

 

 

 

 

[duarte]

Now, I am going to look again closely for the period between January 1968 and January 1985, as well as, for the period between November 1999 and March 2013.

 

 

 

I compared the previous period with the current period, and I came to the conclusion that the S&P500 after reaches its resistance line (key value: 1575) can follow the path 1 or 2, in the first chart.

[duarte]

The two paths described remain open as long as the S&P 500 remains below to 1625.

 

If, over the next two months, the S&P 500 remains below to 1575, I think that the S&P 500 will follow the path 1, but if the S&P500 rises above 1625, I think that the S&P 500 will follow the path 2.

 

I will continue to evaluate on a monthly basis to determine the need to change the initial plan.

 

 

 

[duarte]

See here the buy and hold portfolios update:

 

 

[duarte]

The following are the long-term market timer portfolios.

 

 

 

[duarte]

Below are the charts along with brief commentary.

 

The following two monthly charts give a long-term perspective for the S&P 500.

 

I am going to look again closely for the period between 1967 and 1984, as well as, for the period between 2000 and 2013.

In December 1980, the S&P 500 closed above to its resistance line and then fell for 20 months. For that reason, even if the index closes above to its resistance line, the fall will remain possible. On the other hand, if the index rises above 1625 (above 3,17% of its resistance line), it is more likely to go up rather than down.

At this time, the two paths remain open but the very bearish sentiment supports the continuation of the rise.

Let's see what happens. This month and next month will be very important to trace the path for long term.

 

 

[duarte]

The following is the portfolio:

(The chart is updated on a monthly basis.)

 

 

[duarte]

The following is the portfolio:

(The chart is updated on a monthly basis.)

 

 

 

The following is the portfolio:

(The chart is updated on a monthly basis.)

 

 

[duarte]

The following are the long-term market timer portfolios:

 

 

 

[duarte]

I am going to look to the period between 1967 and 1984, as well as, for the period between 2000 and 2013.

As I have written before now, my guess about what is happening is that the S&P 500 since 2000 is following the path between 1968 and 1984.

At this time the key is to understand if the breakout above the long-term resistance line was or not decisive.

When the breakout is decisive, the resistance level then becomes a support level, but I don´t know yet whether or not this will happen. My big question is this: Will red support line hold?

 

 

[dankenichts]

Very interesting, keep up the good work!

 

[dankenichts]

Will red support line hold?

 

I don't think this is important, because the market was overbought, before the correction startet.

 

If you draw the resistance line from the 70's horizontally, you can see, that there was a bear fake (in german: Bärenfalle), before the real bull market startet.

 

I think we will see a similar bear fake again, before the next great bull market will actually start.

 

[duarte]

The long term market timer portfolios went down its first month since the start.

Following 7 consecutive months of rises, the S&P 500 fell in June.

 

 

Note:

On 10 Jun 10 there was a 2 –for- 1 Stock Split for the ProShares UltraPro S&P500 (UPRO).

 

 

The following are the long-term market timer portfolios:

 

 

 

[Dasfunzt]

I'll try to explain why S&P 500 will be much higher in 5 years.

 

What´s very risky without fundamental analysis.

 

Kind regards from the big fat megaphon pattern.;-)

[duarte]

Very interesting, keep up the good work!

 

 

Thank you dankenichts.

 

 

 

[duarte]

If you draw the resistance line from the 70's horizontally, you can see, that there was a bear fake (in german: Bärenfalle), before the real bull market startet.

 

I think we will see a similar bear fake again, before the next great bull market will actually start.

 

 

I also saw this. I wrote about it. I wrote on 21 April 2013, “In December 1980, the S&P 500 closed above to its resistance line and then fell for 20 months.For that reason, even if the index closes above to its resistance line, the fall will remain possible. On the other hand, if the index rises above 1625(above 3,17% of its resistance line), it is more likely to go up rather than down.”

 

The difference is that this time, the index increased more than 3,17% of its resistance line.

[duarte]

The following are the long-term market timer portfolios:

 

 

 

[duarte]

The following are the long-term market timer portfolios:

 

 

 

[duarte]

The following are the portfolios monthly charts:

 

 

 

[duarte]

The portfolios reached yesterday a new annual maximum monthly.

Specifically, the long term market timer high risk portfolio reached 53,59% yesterday, a new annual maximum monthly.

It has remarkable how quickly the market goes up. The S&P 500 has fallen just one month since the beginning of the year.

[duarte]

I will put stop loss orders in all open positions.

An increased number of technical indicators that I use for short term trading are changing to sell signal and I have more doubts than usual about the future direction of the market in short term.