SP500 (INDEXSP) BBUS

Originally posted by tinhat: ↑

You are correct, next FOMC meeting is 25 & 26 July.

To the degree that the current rally in the S&P500 has been a short squeeze, the speculators short positions have come in considerably in the past few weeks (green line) but there are still a lot of open short positions by speculators.

I don't know how high the market is going to go and I don't know how low it is going to go, but at the moment it is going up. Do you have any targets? Do you have a stop-loss point? If I was forced to take a punt on the S&P500 I would say it's going to get to get up to over 4700 and probably test it's all time high at 4800.

The fact that the market has rallied 27% does make it more probably that the October low was the low of the cycle but who knows. Looking at the S&P500 there seems to be a rhythm of an average of four years between cycle bottoms. Almost always a cycle bottom is followed by a new high. The exceptions are:

- between the 1929 bubble up to the end of WWII in 1942 and
- the escalation of the Vietnam war & middle-east troubles & oil shock period of the 1970s.
- The 2007 high was just a squeak above the 2000 high and really formed a double top rather than a significant higher high.

Another area of interest on the chart is the '60s & '70s when the S&P 500 put in a series of three cyclical higher highs punctuated by three cyclical lower lows.

And then there are those who say that times really are extraordinary and that this is only the second time in history that the US is experiencing a significant contraction of the M2 money supply.

Throw a MACD histogram on a monthly chart of the S&P500 as I have done in my charts and not that the moving averages are on the cusp of crossing over on the up and that the histogram is on the cusp of turning positive. Also note that the price, although having broken out, is well within the two standard deviations of the Bollinger bands. I cannot find any time when the market does not make a new high after the cycle low from a comparable point on those indicators, with the exception of during WWII and around 1948.

Here's another thing. While unemployment is a lagging economic indicator and the stock market tends to correct prior to unemployment peaking, there is not actually that strong a correlation between unemployment and the stock market.

It's all a guessing game. It's just a question of how much money do you want to put at risk in playing the game.

What happens if October was the cycle low and there is no further significant correction? What happens if the market in fact puts in a double top or a new high before correcting again? What happens if the market just sea-saws sideways for a decade?

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Nice post, it is good to see other points of view. My holding of BBUS is around 10% of my portfolio, it has already returned my to me in dividends more than i have lost. My decision to buy and hold a portion of BBUS is based on my belief that we are nowhere near the bottom of this cycle, therefore I'm no implementing a stop loss, as it is impossible to time, but i believe we are close to a sustained move down. Keep in mind I've thougjt that for quite awhile, and fully admit that I have not timed it, but I'm OK with that. I once held a stock that had solid assets, but it declined in price for years, I sold my position 7 years later for a massive loss and it recovered two years after that, so I understand risk and timing!
I think a lot of traders would be eyeing BBUS right now, fortunately I have not entered a trade for quite awhile, I did post that I would top up at 4350, but my instinct stopped me. I follow the trading style of Davis S Nassar (old school) he teaches to develop a discipline of your own style using basic rules. One of his lines is "ride your winners and crucify your losses".
The US economy does appear to be doing well, but if from what I've read the consumers keep it afloat are buried in debt.