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Since the late 1800’s, the Dow has experienced three periods where it traded
sideways, ranging from 13 to 17 years, [which always] resulted in upside breakouts . The S&P 500 finds itself within a few percentage points of where it was 13 years ago [so the question is “Has the time now come for the Dow and S&P 500 to once again go Up, UP and Awaaay?” Let’s take a look at some charts.] Words: 299; Charts: 2
This post is presented compliments of www.munKNEE.com (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
CLICK ON CHART TO ENLARGE
Next let’s take a look at where the market P/E ratio stood when prior breakouts took place in the chart below from Doug Short reflecting the long-term P/E ratio created by Crestmont Research.
CLICK ON CHART TO ENLARGE
I’ve highlighted what the P/E ratio was at the end of the prior 13-17 year sideways markets and they ranged from 6 to 7. The current P/E ratio stands at 21….[which] is much closer to market highs than lows over the past century! [In addition, from] a Power of the Pattern perspective, notice that at the end of prior long-term sideways markets, steep bearish rising wedges weren’t in place like they are today.
Conclusion
[While] the markets could break to the upside of the current 13-year sideways pattern [the answer to the question “Has the time now come for the Dow and S&P 500 to once again go Up, UP and Awaaay?” seems unlikely in that not too] many long-lasting bull markets have started when the P/E ratio stood at 21. Anything is possible, [however, so] investors have to remain open-minded to all possibilities! Will it be different this time? Stay tuned!!!
Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://blog.kimblechartingsolutions.com/2013/02/dow-and-sp-500-about-to-break-above-their-13-year-sideways-patterns/
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