S&P 500 2011 Projection

The S&P 400 Mid Cap index deserves attention, perhaps more than the other indexes. It has broken through the 2007 high and successfully tested it on a pull back. If there were a strong enough bearish force in the market, the 2007 highs would not have been surpassed! The Nadsaq 100 (NDX) and the equal weighted Nasdaq 100--which neutralizes the positive bias Apple has on the index--have also breached the 2007 highs.

The first two charts below (weekly bars) show the Mid Caps and NDX; included in each are channels and a Fibonacci ratio. The Fib line connects the March 2009 low to the April 2010 peak. A possible target is where the 1.618 level and the upper trendlines meet, which projects about 15% more upside on each index. The temporal target on the channels is 3Q-4Q 2011.

The third chart is of the S&P 500 with the same Fibonacci analysis. Amazingly, the 1.618 level between the two points specified is 1560, essentially the 2007 high.





What conclusions do I draw from the studies above? Well, out of the many different scenarios one can conjure up, I would consider 15% upside for the balance of the year to stand out as one worth contemplating. I will observe market developments in the coming weeks and months to determine the degree to which the market is or is not fitting into this and other projections.