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Sunday, June 2, 2013

The S&P 500: Welcome to day 59 of the Secular Bull Market

The S&P 500 uptrend is in good health.  From the long-term perspective, SPX has broken out from a massive decade-long consolidation. There has been media speculation lately that the present rally may be over, but the long-term technical perspective suggests this may be the early innings of a Secular Bull Market.

Looking back we see the multi-decade uptrend of the 80's and 90's leading into the ten year consolidation that begins  in 2000.  In March 2013, SPX breaks out from the range.

A closer look at the last decade.  Lots of market turmoil in the last ten years. And now, a fresh breakout. This is where bull markets can be born.

If we take a closer look, we see that the last leg of the ten-year consolidation consisted of an uptrend that began in March 2009.

The 2009 uptrend, still in progress.

The March 2009 trendline is the line in the sand for this market. The multi-year investor can use this trendline, in conjunction with the 200 day moving average, to decide whether to be allocated in the stock market. If the uptrend breaks, get short or get out.

The latest development in this 2009 uptrend has been a prominent acceleration that began in November 2012.

Since November 2012 SPX has been traveling in an accelerated upward channel that currently tracks along the 50 day moving average.

For investors with intermediate timeframe objectives and tighter risk controls, this is the trendline that will be used to time their allocations, as opposed to the long-term 2009 trendline indicated above. With the November intermediate trendline currently tracking the 50dma, it should provide a useful gauge of market sentiment when it is eventually breached.

No one can say how long a trend will last. I cannot tell you if the 2009 uptrend will end in 2013 or 2033.  But as long as these trends are intact, the investor's job is to simply go along for the ride.  When the trend eventually comes to an end, price will tell us. As for now, until price says otherwise, welcome to day 59 of the Secular Bull Market.

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