Like March 2009, My Work Shows Big Northside Ahead for US Stocks

Like March 2009, My Work Shows Big Northside Ahead for US Stocks

$DIA $SPY $QQQ $RUTX $VXX

I expect stocks to consolidate in an uptrend the Bull run off the 23 March lows then rally into the end of the year.

I have been tracking the Y’s 2009-2020 action since the March C-19 coronavirus chaos, and it looks uniquely the same. If I am right, we will see a consolidation of the run up from the 23 March low and a strong rally in the Fall to year’s end..

The picture since the end of March.

Since the low at 23 March, the S&P 500 is 37.1% higher. In Y 2009, the low came on 8 March and in the same 58 day frame, the benchmark index was up 39.4%.

So far in Y 2020, stocks have tried to break North 2X from the Y 2009 line, and faded.

On 12 April the Y 2020 rally got ahead of Y 2009 by 11 pts. Stocks then gave up all those gains in the next 5 trading days.

And last Monday the index was 13 pts ahead of the Y 2009 run, then on Thursday S&P 500 dove 5.9 closing the gap.

The likeness between the 2 frames are striking because valuations are higher, as the S&P 500 currently trades 19.6X recent peak earnings of 155/share compared with 10.4X peak earnings, in Y 2009.

The reason is because Big Tech now makes up a greater share of the index now at 32%, compared with 18.4% in Y 2009. The dominance of Big Tech in Y 2020 works to offset some unknowns,

And Big Energy represents a smaller share of the overall market at 3% Vs 12.4% back then.

And though financials led the Bull run higher in Y 2009, this Y 2020 rebound is broader-based. Plus, The Trump Administration’s fiscal and monetary stimulus/aid/relief have been richer by far.

As I see it lots of professional investors are overthinking this medical malpractice chaos. Because in fact it is not so different in the pattern, the Y 2009 is still Bullish with a Very Bullish bias.

Remember, in a Bull run, the Bull pauses to refresh always.

Notably, from day 58 of the beginning of the Y 2009 rally, the S&P 500 traded sideways go for 34 trading days, and then for the rest of the yr made up for it, with a 17% rally from late July through year end.

If history repeats itself that would put the S&P at 3,588 on 31 December, for an 11.1% gainer on the year, where it could get a bit toppy.

Tuesday, the major US stock market indexes finished at: DJIA +526.82 at 26290.00, NAS Comp +169.84 at 9895.88, S&P 500 +58.15 at 3124.61

Volume: Trade on the NYSE came in at 1.3-B/shares exchanged

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish with a Very Bullish bias in here.

  • NAS Comp +10.3% YTD
  • S&P 500 -3.3% YTD
  • DJIA -7.9% YTD
  • Russell 2000 -13.0% YTD

Looking Ahead: Investors will receive Housing Starts and Building Permits for May and the weekly MBA Mortgage Applications Index Wednesday.

Have a healthy day, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.