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Where is the market headed?

The markets are behaving, with the S&P500 consolidating around the expected baseline of 1950.  (See previous article Sep’15:   S&P500 resets from 2100 to 1950  )

I suspect the worst isn’t over yet and prices will move lower in the coming weeks or months.  Overleveraged Energy/Commodity sectors haven’t capitulated and global trade remains shadowed by overcapacity.  These conditions won’t improve any time soon.

Markets could drop 15% from here and only be trading at “fair” valuations.  At current earnings, you won’t find “bargains” until the S&P500 is well below 1700.

So where is the market headed?  I have no idea, and history is no help. Reference the below chart- today the S&P500 closed at 1951; however, it is certainly in the realm of recent historic valuations that it could trade between the extreme ranges of 1200-2700.  [ Chart is based on a 16 year valuation curve of PE 13.5-30 values. ]

Don’t like that uncertainty?  Then you shouldn’t be investing in the stock market.

I don’t know where the market is headed but I do know that as long as the S&P500 remains above 1850, we’re safe from a Bear market.  ( See previous article Jan’16:  Correction or Bear market? )

Where is the market headed 160225


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