What an awesome "Bull Run" we've had since March 9th, 2009. And despite today's slight pullback, the stock market of the U.S. is acting like it not only wants to go higher, but is ABSOLUTELY DETERMINED TO GO HIGHER!
So, who do you think you are, and who do I think I am, to think the DJIA and S&P 500 can't surprise a lot of people to the upside? I know it sounds like something Harry Dent Jr. might write, but when you understand how the stock markets really work, what drives prices up or down, it is more then plausible to think there's more room for this "bull" to run.
The Wall Street Cheerleading Trio (Jim Cramer, Larry Kudlow and Abby Joseph Cohen) are all doing their utmost to make sure that the average investor's mind is changed, and that instead of mistrust, they engender "full-speed-ahead" confidence that the markets are in "bull-mode" once again.
Last Thursday, during an interview on cable’s popular financial channel, CNBC, Goldman Sachs Group Inc. (NYSE: ) celebrity market strategist, the ever ebullient Ms. Cohen said the S&P 500 Index may rise as high as 1,100 this year, although she warned the move to the top could be rocky.
“We do think that’s achievable, but it doesn’t mean we get there in a straight shot,” Cohen told CNBC. Added Cohen:“Even if this is the new bull market, don’t expect it to look like a ‘V.’ Expect it to look like a series of upward steps.”
According to a forecast put together by the Goldman strategy team, the S&P 500 should trade in a range of 1,050 to 1,100 toward the end of this year. After bouncing back so strongly from its March lows, the S&P 500 is up 12% so far this year.
“We do think the new bull market has begun,” Cohen told her interviewers. “It may prove that it began in March. Clearly many people were looking for better signs on the economy, and now we’re getting them.”
Rebounding corporate profits will be the key catalyst, according to Cohen. She said earnings of $75 a share for the S&P 500 next year are “reasonable” and that the S&P 500 at 1,050 would mean the closely watched index is trading at a Price/Earnings (P/E) ratio of 14.
So from current levels, for the DJIA to hit 10,800 it would "only" have to go up less than 16%, which is about the same percentage the S&P would have to rise in order to reach 1,160. The way the exchange specialists and insiders manuever the stock exchanges, any experienced trader or investor knows that they won't allow these averages to go straight up.
But the "trend is your friend" in the sense that if "they" want the markets and the market averages to keep going up, "they" will make it happen sooner than later (it will be interested to see what happens when the rest of "them" come back from their summer vacations and August holidays after Labor Day).
The late Richard Ney wrote three books on the nature of the New York Stock Exchange. They are out of print but are a fascinating, illuminating read that opens one's eyes to why stocks and the market go up and down. The more I study his writings the more I experience a "paradigm shift" as to who and what "moves the stock markets".
Ney believed (and remember, this was anywhere from 5 years ago to 45 years ago--Mr.
