ARTICLES

Record High

15 September 2017 By PDSNET

By now, we hope that you are an avid watcher of the S&P500 index. If not you can follow this index on your ShareFriend software or, for the minute-by-minute progress on https://finance.google.com/finance?q=INDEXSP:.INX. The reason for following the S&P is that it is the best indicator of [glossary_exclude]bull[/glossary_exclude] and bear markets. If the largest 500 companies on Wall Street are in a bull trend then it is a virtual certainty that other world markets including our own are also in a [glossary_exclude]bull[/glossary_exclude] [glossary_exclude]trend[/glossary_exclude] � or will be soon. And, of course, it is always very important for the private investor to know whether we are in a bull market or a [glossary_exclude]bear[/glossary_exclude] market. In a [glossary_exclude]bull[/glossary_exclude] market about 80% of shares are trending upwards, and the opposite is true in a [glossary_exclude]bear[/glossary_exclude] market. So in a [glossary_exclude]bull[/glossary_exclude] market you need to be [glossary_exclude]close[/glossary_exclude] to fully invested in equities, while you want to be out in a bear trend. So, you would be very excited that our prediction in the last article �Tech Drives the S&P� came true. The S&P500 index has made three consecutive new record highs in the last three days (11^th, 12^th, and 13^th September 2017). Consider the chart:

S&P500 Index - Chart by ShareFriend Pro

Here you can see the ends of the [glossary_exclude]long[/glossary_exclude]-term channel lines which define the great [glossary_exclude]bull[/glossary_exclude] market which began in March 2009. Recently, the S&P has been riding a steeper short-term trendline between these two. The new record high relegates all those bears to the scrap heap. Anyone who followed their advice has certainly lost money � especially those who chose to short the S&P (among them George Soros of all people�!) Of course, now the psychologically difficult level of 2500 is looming. Such �round numbers� are always difficult to penetrate and we can expect some backing and filling as investors adjust to the idea of the S&P being above 2500. We believe that it should get through this level relatively easily and [glossary_exclude]clear[/glossary_exclude] the way for a move towards 3000. And as we suggested, it is the tech shares which have been driving quarterly profits higher. Notable among these is Tesla which has just announced that it is in the process of building a battery powered big truck (horse and trailer). Clearly, along the lines of the model 3, they can take early orders for that truck and use that to boost their cash flow. An electric big truck is a highly disruptive new technology that will turn aspects of the US economy on its head. Notably, Tesla shares have risen 7% in the first three days of this week on Wall Street and were at $366 per share by the close of trade on Wednesday. As indicated, it is highly likely that our market (especially blue chip shares) will follow the S&P up sooner or later.  

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