How high are we going in S&P 500 ?

Markets were hostage to FOUR elements all year.

-First, it was Europe debt crisis.

-Second, it was US economy going into recession.

-Third, China going into hard landing.

-Fourth, US politicians unwillingness to deal with urgent economic issues.

Based on the above reality, S&P 500 went from 1370.58 in April 2011 to 1074.77 in 1st week of Oct 2011.....a decline which lasted almost six months.This decline of 295.81 points or 21.58% defines a bear market.

This decline in worldwide markets, where many indices went to two year lows.

BUT...the biggest beneficiary of this decline was an awareness in European leaders to deal with the crippling issue of their debt. They woke up & made a big commitment to nail the debt issue from many angle.

China with its calculated approach was never headed for hard landing, latest data proved even skeptic's to wave white flag.

US grew its GDP @ 2.5%, which put most advocate of recession in a very embarrassing mode. Most of them are known as Economists who are highly paid & very vocal about their "imaginary numbers" ?

BUT, US politicians are now in focus with a deadline looming to get their act together.We all will be subjected AGAIN with TV commentary which will turn off any sane human being.

SO..we are batting 3 out of 4...not bad, from 0 out of 4, a major shift in investing environment.

As markets anticipate good things, we have moved UP from 1074.77 to 1285.09, a move UP of 210.32 or UP 19.57%.......in last four weeks......

NOW the logical question is ?

Where to from here ?

Many technicians are weighing in as listed below :

-We go down Monday & Tuesday

-We are going UP to 1302 & then it is all over.

-We are going UP to 1305 then its over.

-We are going to 1325 max & then its over.

SO .....in analyzing above numbers, it is a pretty good picture in the short term.

SO WHY WORRY, BE HAPPY......

Based on my OWN observation of events, it is safe to see a very positive picture for markets.

In the last 11 years we have not gone anywhere fast, all we have done is gone down to test lows in markets as evidenced by March 09 lows, when S&P 500 was @ 666 vs previous all time high of 1527.46 on March 24th, 2000........a stunning reversal of 861 points or 56.4%.......

Based on how i think S&P 500 will unfold is listed below :

-First target 1325

-Second target 1370

-Then pullback of 2% to 4%

-Third target of 1425

As you can see, that i do expect S&P 500 to make a new all time high in this run.

Whenever there is a new all time high, it makes series of all time highs.

YES, it is a new strong bull market in the making, with its usual normal pullbacks along the way.

History has shown us that laggards, will be the biggest gainers.

Yes we have theories like dog of the dow, which should work..example HPQ.

So get your dog list going, it may outperform AAPL & AMZN ?

Here is my $ allocation as of Friday :

LVS 31.94%

POT 24.32%

JCP 21.95%

RVBD 13.50%

TLM 8.29%

Most of my stocks can be safely called dog based on 52 wk highs.

I do expect most of the dogs to make new 52 wk highs as we move UP in next six months....

Good luck with your OWN analysis & comfort level.

Being a Taurus, i am known to be super OPTIMISTIC & can change on a dime with great ease.They call it ADAPTABILITY ?

BLOG does NOT give buy or sell.

Saleem