Friday’s Flat Finish and Musings on a Stock Market Triple Top

By: PhilStockWorld

Courtesy of Doug Short. The S&P 500 slipped at the open and hit its intraday low, off 0.31%, at mid-morning. The index zigzagged through the day along a faint upward slope. A rally in the final hour took the 500 briefly into the green before settling for a flat finish — down seven basis points or, if you like percents, you’ve got to calculate the close to three decimal places: -0.005%. For the week, the index gained 0.38%.

Here is a 5-minute chart of today’s struggle.

I received an email earlier today from David Lea, who asked “What do you think about the possibility of the S&P heading into a triple top? Do the US fundamentals support the market moving to new highs?”

David’s question prompted me to draw up a 20-year monthly chart of the S&P 500.

I share my overview of four market valuation indicators each month here. Could we be witnessing a triple top? Certainly. But, as I have periodically pointed out elsewhere, at today’s return on fixed income investments, the lure of equities might remain strong despite valuation headwinds. Time will tell.

The S&P 500 is now up 3.22% for 2013 hovering just below its interim closing high set yesterday.

From a longer-term perspective, the index is 117.6% above the March 2009 closing low and 5.9% below the nominal all-time high of October 2007.

For a better sense of how these declines figure into a larger historical context, here’s a long-term view of secular bull and bear markets in the S&P Composite since 1871.

- Phil

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

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