Study: the stock market is near new all-time highs. Forward returns are VERY bullish


So far in 2018 we have been consistently on the right side of the market via:

  1. Focusing on the fundamental economic data.
  2. Using quantitative market studies to determine whether the market is more likely to go up or down.

The S&P 500 is now within 1% of its all-time highs, while the S&P 500’s Total Return Index (which includes dividends) has already made a new all-time high vs. its January 2018 high.
This proves that predicting the market’s medium term and long term direction isn’t about “guessing” where the market will go next. It’s about focusing on the data in an objective manner.


With the S&P 500 close to making a new all-time high, some people are betting that the stock market will make a marginal new high and then peak.
That is highly unlikely. The stock market will probably make a new high and then rally over the next few months.
Today’s study
The S&P has gone 6 months without a new high, and is now close to making a new high. When this happens, the stock market’s medium term (3-6 months) forward returns are VERY BULLISH

Click here to download the data
As you can see, the S&P 500 goes up almost every single time in the next 3-6 months.
Why?
Imagine a rocket that’s fueling up. The longer the rocket fuels up, the higher it will eventually blast off. The S&P 500 has been consolidating in a wide range from January 2018 – present by swinging sideways. This “consolidation pattern” is akin to a rocket that’s fueling up. When the rocket (S&P 500) makes a new high and starts to blast off, it does so with a renewed sense of vigor.
Click here for more market studies.

3 comments add yours

  1. I’ve made very good performance during the last months, regardless of a choppy market, also thanks to your very valuable posts, Troy.
    Thank you.
    I also expect the market to go up in late 2018. Let’s try to catch the opportunities of this.

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