Monday, April 4, 2011

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.


  1. Glad to see you posting again, George! Welcome back.

    Do you have any other indicators that match up the timing that these charts point to, that is, a top late this year?

  2. Pima, the charts provide a mental map, but it is not the only one I have. Thanks to your question, I have added a paragraph to clarify.