SPX: What's In Store For The 2020s & 2030s?

THE LONG VIEW INTO THE FUTURE...

Each candle on the following chart of the SPX represents a period of one year.

From 1932 to 1972, it, essentially, rallied for 40 years, particularly for the latter 30 years. From 1974 to 2000, its bull run lasted for 26 years. For the past 10 years, it's also been in a strong bull market.

Very simply, history shows that, for the most part, the SPX has been a strong (BUY) candidate for longer-term investors over an average of 30 years running, and that is likely to be repeated for another 10-20 years, generally speaking.

As I write this post on December 28 (with only 2 trading days left in 2019), the following monthly chart of the SPX shows that it has gained 340% from its March 2009 lows.

The Balance of Power is currently under the control of buyers and has yet to match prior highs...hinting of further upside potential for 2020.

Furthermore, if the 2020s are as strong as the 2010s, look for a similar percentage gain through to 2030...and, possibly again to 2040...before we eventually see a meaningful pullback/consolidation for, perhaps, 10 years through to 2050.

As long as the Technology Sector (Nasdaq Composite Index) remains strong through 2020, as I wrote in my post of December 26, no doubt that will bode well for the SPX.

The following monthly chart shows a gain of 554% for the past 10 years. The gains in the tech sector have outpaced the U.S. markets, in general. That is likely to continue and, possibly, strengthen over the next 10 to 20 years as innovation accelerates...buoying the rest of the markets, in turn...one to watch!

N.B. By the way, the SPX managed to hit my Q4 target of 3233 by the end of this year, as I forecast in my post of September 29...(the monthly chart below is from that post).

P.S. So, as I asked in my post of December 24 [one-day $34.4 Billion U.S. retail sales and $17 Trillion global market gains (21.68%) this year], "What's not to like, Joe?"

Happy New Year!

* UPDATE Feb. 5, 2023...

From the date this article was posted, the SPX rallied another 1,600 points to a high of 4817.88 by January 2022, as shown on the following monthly chart.

It, subsequently, pulled back to a low of 3490 by October 2022 and has rallied somewhat to 4136.48.

The monthly timeframe is still in a technical downtrend and price action during 2022 has been very choppy and volatile, producing very large daily, weekly and monthly swings.

I analyzed a number of markets in my 2023 Market Forecast and came to the following conclusions...

So, where the SPX goes from here, is anybody's guess...for now...but, I have a feeling that the volatility, choppiness, and large-scale swings have not yet disappeared. 

And, with Joe Biden as the current President (since January 2021), I'm sure that those conditions will persist for, at least, the rest of 2023...and, possibly, until the end of his first term in January 2025.

And, as I concluded in my aforementioned forecast, the SPX may drop to 3200, or lower, either before the end of this year, or by the end of Biden's first term...BEFORE we see the SPX resume its historical BULL RUN into the end of the 2020s and 2030s.

* UPDATE January 24, 2025...

To read the latest update, see my new post entitled SPX: What's In Store From 2025 To 2029?

World Market "Buy" Signal Triggered

A new "BUY" signal has just triggered on the World Market Index. I last wrote about this index on June 29th.

Price punched through 1900 (which will now need to hold as major support), the RSI has broken its latest downtrend and is back above 50, and there are new bullish crossovers on the MACD and PMO indicators, as shown on the following Daily chart.

While the SPX has broken above near-term resistance of 2450 and closed at another all-time high, it's a nano-breath away from also triggering a new "BUY" signal.

If price remains above 2450, if the RSI remains above 50, if the recent bullish crossover holds on the MACD, and if we get a bullish crossover on the PMO (imminent), we'll see this trigger erupt, as shown on the Daily chart below.

The SPX:VIX ratio has also broken above near-term resistance of 250 and closed at a new all-time high, as shown on the Daily ratio chart below.

Inasmuch as the RSI has broken its downtrend and is above 50, and bullish crossovers have formed on the MACD and PMO indicators, this ratio is confirming that a new "BUY" signal has triggered on the SPX. However, to see this through to fruition, we'll need to see price remain above 250 and volatility remain at all-time lows.

The following 1-Year Daily chartgrid of the 9 Major Sectors shows that Industrials and Materials are leading the pack, followed closely by Technology, Health Care, Cyclicals and Financials.

Utilities and Consumer Staples have slumped the past couple of months and Energy has been in a major downtrend all year. I'd keep a close watch on these three Sectors to see if buyers begin to dip their toes into these anytime soon.

If so, and, if the other six Sectors can hold their own, we will, no doubt, see more new records set in the SPX, with buying continuing in the World Market Index (the Year-to-date graph below shows that 8 of the 9 Sectors have decent to healthy gains, so far this year, while Energy is at -12.05%).

* P.S. July 16th

If we get a bull run like we had in the 1990's, then the SPX could reach 2700 by the 2020 Presidential election, as forecast in my post of November 26, 2016.

A level of 2700 represents approximately the next major long-term Fibonacci extension level (1.618%), as shown on the following Monthly chart of the SPX.

However, price is currently up against major resistance, formed by a long-term Fibonacci fanline (40%) and dating back to 1990, as shown on the Monthly chart of SPX below, and is approaching an external Fibonacci retracement level of 200% at 2485 (taken from the highs of 2007 to the lows of 2009).

So, in the shorter term, we could see a "bull trap" occur prior to a decline in equity markets...keep a close watch on the above-referenced Major Sectors for further signals and any evidence of weakening.

Today's "Shout Out" -- 2017 SPX Target Hit 10 Months Early!

Further to my post of February 18th, the S&P 500 Index (SPX) hit this year's projected target of 2400 today (March 1st) -- 10 months ahead of schedule -- and set another new all-time high in the process!

SPX 5-Yr. Daily

All other U.S. Major Indices also participated in setting new record highs today, with the exception of the Utilities Index. It, however, is in a strong uptrend.

U.S. Major Indices 1-Yr. Daily

The following graph shows percentages gained in the Major Indices since January 1st of this year.

U.S. Major Indices: Percentages Gained Since January 1, 2017

With bullish sentiment still strong, the SPX remains on track to hit its 2020 projected target of 2700.

SPX 15-Yr. Monthly

Most world markets were also strong today, especially European markets. We'll see if China picks up the pace in the near future.

World Market Indices

Market Forecast for 2017: SPX at 2400 by End of Year

On November 26th, I posted an article which outlined a hypothetical scenario of the S&P 500 Index reaching 2700 by the next U.S. Presidential election in November 2020.

I realize that this is only one of many possibilities that lie ahead for the SPX. However, given the aggressive economic, tax and fiscal agenda that President-elect Trump is currently promoting, it could, very well, materialize without too much resistance.




In keeping with the trajectory and velocity associated with that premise, I anticipate that the SPX could reach 2400 by the end of 2017, as shown on the Monthly chart below.

Monthly SPX

In last year's market outlook for 2016, I anticipated a rise of around 5-6% in equities, in general, in a run-up to this past November's Presidential election.

As of today's date of December 1st, you will see that the S&P 500 Index has gained 7.2% Year-to-date, as shown on the first graph below, while the Dow & Nasdaq Transport Indices and Russell 2000 Index have gained the most. The Nasdaq 100 Index has been the weakest.

The second graph shows the steep rise of the Dow & Nasdaq Transport Indices and Russell 2000 Index from the day after the election.

The third Year-to-date graph shows the percentages gained/lost for the 9 Major Sectors. 

Energy, Industrials, Financials and Materials have gained the most, while Consumer Staples has gained the least, and Healthcare has lost 4.16%, so far, this year. 

The last graph shows the steep rise of the Energy, Industrials, Financials and Materials sectors, and the decline of the Healthcare and  Consumer Staples sectors, since the election.

CONCLUSIONS

Assuming that volatility will be kept low (which can be monitored in a manner as described in my post of November 26th), I'd project that equity markets, in general, will gain around 11% in 2017. That would place the S&P 500 Index at just above the 2400 level by the end of the year.

In that regard, I think it will be important that Financials, Large-Caps and Small-Caps stay strong and that market participants continue to favour the riskier sectors over their more defensive counterparts. As well, I'd like to see Technology firm up and gain strength to support such a bullish outlook.

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P.S.
By the way, for those who have pooh-poohed the validity or value of my forecasts, I would, respectfully, mention that forecasting is a useful tool for any serious trader/investor to implement in order to track, assess and learn from one's future successes and failures on a short, medium, and long-term basis.

And, they can read my prior years' forecasts at this link and determine their merit for themselves.

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P.S. -- SHOUT OUT TO INVESTING.COM...

As a contributing writer to Investing.com, I'd like to thank them for inviting me, once again, to participate and share my views and for publishing my article at this link on their site on December 28th, along with some of their esteemed contributors. It's a privilege to have contributed to their annual forecasting special during the past few years.



* UPDATE February 21, 2017: Since the beginning of this year, the SPX has already gained 5.65%, as shown on the following Percentages gained/lost graph of the U.S. Major Indices...a little over half-way to its projected 2017 percentage increase.

U.S. Major Indices -- Year-to-Date percentages gained

SPX Outlook to 2020 U.S. Presidential Election

* See UPDATE below...

I've written about the SPX:VIX ratio many times in the past. I've mentioned, as recently as November 13th, that it will be necessary for the bulls to hold price on this ratio above the 150 level in order for SPX equities to continue their rally with little volatility to impede this rise.

This post will take a look at one possible scenario that could see the SPX reaching a price of 2700, or so, by 2019, in anticipation of the next U.S. Presidential election in 2020.

As shown on the Monthly chart of the SPX below, price has rallied this month from the "median" of a long-term regression channel (which begins at the lows of 2009), and has broken out to all-time highs (above an almost two-year consolidation/congestion level) since Donald Trump was elected as President on December 8th.

It looks poised to continue this advance in a manner similar to that which occurred after Barack Obama was re-elected as President in November of 2012. If it did continue on that trajectory and at that velocity, we could see price reach the "+2 standard deviation level" on this channel at 2700 by November-December 2018. After such an advance, price could very pull back to around the "-1 standard deviation level" to around 2370, then bounce back to 2700 by the next election in November 2020.

Of course, that hypothetical scenario would depend on a lot of factors -- especially whether President-elect Trump's ambitious economic/tax/fiscal agenda can be supported by Congress and implemented, together with whatever future monetary policy measures may be enacted of the Fed -- to merit such an exuberant advance in equities.

Monthly SPX

As can be noted on the following Daily, Weekly, and Yearly (each candle represents a period of one year) ratio charts of SPX:VIX, it will be critical that bulls hold price above the 150 level, which is defined as a major support level, not only by price action, but also by the daily and weekly 50 and 200 moving averages.

The RSI, MACD and PMO indicators are hinting of further short-term strength in the SPX on the Daily timeframe, and crossovers are either imminent or have just occurred on the MACD and PMO on the Weekly timeframe, with an RSI holding above 50, also hinting of medium-term strength.

Price action on the Yearly timeframe is, currently, extremely bullish for the SPX (a massive bullish engulfing candle is forming), and, depending on its close at the end of this year, it may forecast whether the hypothetical longer-term scenario that I've described above is realistic and has begun.

Daily SPX:VIX Ratio

Weekly SPX:VIX Ratio

Yearly SPX:VIX Ratio

CONCLUSIONS

We'll see whether a Santa rally is currently in play...or whether a lump of coal surprises the markets this year. These charts are worth monitoring as part of your crystal ball-gazing activities -- in the short, medium and longer terms -- leading up to the next Presidential election.








* UPDATE January 17, 2018...

The S&P 500 Index reached, and closed above, 2700 on January 3, 2018 (nearly 3 years ahead of what I had forecast), as shown on the following Daily chart.

It has since surpassed this 2020 election target by over 100 points, already, pointing to a very aggressive bull market since the November 8, 2016 election (663 points gained since then)!

Obviously, my crystal ball needs an upgrade...👀