An endless series of low-volume rallies is not enough to get you over a major level on the S&P 500 so, once again, we are being rejected at the 4,500 level. On the surface, things look good with a projected $1.8Tn in earnings for the S&P 500 and that’s up 28% from $1.4Tn in 2019 but our Government (money borrowed by you and I on their behalf) has spent over $10Tn so our Corporate Masters could make that extra $400Bn – which will be the ANNUAL interest on what we borrowed at 4% (which will be more profits for the banks).
This is like playing Monopoly when the Banker is cheating – there’s no way you can win…. Meanwhile, in 2019, the S&P 500 was topping out at 3,000 so 4,500 is 50% higher than we were, not 28%, which would be 3,750. So, EVEN IF there were no stimulus and this were an honest 28% increase in earnings – we are still 20% too high at 4,500. This is not sustainable – especially if the Government isn’t going to throw in another few Trillion Dollars to keep things humming next year.
As you can see, it took the S&P 4 years to get from 2,000 to 3,000 (up 50%) and that 1,000 point rally had two 500-point pullbacks along the way. This is our first attempt at 4,500, less than 2 years after crossing 3,000 and that’s a 1,500-point rally and the pullback we’ll be looking for is 3,750 at some point, which is only down 16.66% – so not too big a deal if it happens (and we hold it).
Again, I’m a bit skeptical because of all the stimulus but stimulus there is so 4,500 we have – for the momemt. Now it’s up to the Fed and the Government to decide how much they want to spend to keep Corporate America making this kind of money (while not taxing them) at the expense of the American people. In situations like this – you know better than to expect our Government to be there for the people….
Provided courtesy of Phil’s Stock World.
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