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An Upside Target for Stock Prices

By Jeff Clark
Tuesday, January 22, 2013

It has been a great year so far for the stock market...  
 
We're only three weeks in to 2013 and the S&P 500 is already up 3.5%. The index closed at 1,485 on Friday – well within reach of its all-time high of 1,576 from back in 2007.
 
Stocks tend to perform well this time of year... typically, all the way into April. So there's good reason to expect we'll challenge the all-time highs sometime in the next couple months.
 
Investors are coming back into the market, and fear is on its way out...
 
Cash flows into equity mutual funds are at their highest level since early 2000. And the Volatility Index (the "VIX") – the market's "fear gauge" – is at its lowest level since 2007.
 
Yes, indeed, these are happy times. So please forgive me for pointing out an inconvenient truth... both 2000 and 2007 turned out to be dangerous times to buy stocks. Take a look...
 
 2000 and 2007 Were Dangerous Years to Buy Stocks
 
Stocks rallied early in 2000 and 2007. Then they suffered a mild late-spring decline before rallying to new highs in the summer. It was all downhill from there.
 
Today, the S&P 500 is tracing out a bearish rising-wedge pattern (the blue lines) as it approaches the resistance level of its previous highs (the red line). We still have a few more months for the index to work back and forth inside the wedge before threatening to break down from the pattern. But this is something we need to keep in the back of our minds... as it could spell trouble for the second half of this year.
 
The popular opinion among most analysts seems to be 2013 will be a good year for stocks, and the median target for the S&P 500 is about 1,550.
 
With the current flood of new money coming into the market – and with investor fear at its lowest level in years – we could see 1,550 sooner rather than later. After that, though, it may be a good time to start looking for the exits.
 
Best regards and good trading, 
 
Jeff Clark




Further Reading:

Earlier this month, Jeff shared a way to generate safe, steady income in the stock market. He's personally used this strategy for more than 20 years. And it's made his subscribers big gains. Learn more about his methods here: How to Legally "Print" Money.

In The Daily Crux
Market Notes
Crude oil prices jump 12% over the past six weeks.
 
American manufacturing uptrend continues as Honeywell surges to a 13-year high.
 
Gene-sequencing giant Life Technologies breaks out to a new all-time high.
 
McDonald's is breaking out of a one-year downtrend... shares touch their highest level in nearly three months.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1485.98 +0.3% +13.6%
Oil (USO) 34.77 +0.3% -10.5%
Gold (GLD) 163.09 -0.2% +0.9%
Silver (SLV) 30.81 +0.5% +3.9%
U.S. Dollar 80.04 0.0% -0.1%
Euro 1.33 -0.1% +2.8%
Volatility (^VIX) 12.46 -8.2% -40.4%
Gold Stocks (^HUI) 429.85 +0.2% -16.2%
10-Year Yield 1.84 -2.1% -3.2%

World ETFs
Symbol Price
Change
52-Wk
Singapore (EWS) 13.64 -0.2% +20.7%
USA (SPY) 148.33 +0.2% +15.9%
S. Korea (EWY) 62.45 -0.4% +13.8%
India (IFN) 22.03 +1.4% +13.7%
China (FXI) 41.70 +0.8% +11.8%
Taiwan (EWT) 13.45 +0.4% +11.3%
Japan (EWJ) 9.87 +0.4% +8.8%
Canada (EWC) 29.19 +0.1% +7.9%
S. Africa (EZA) 67.05 -0.8% +6.2%
Israel (ISL) 13.59 -1.1% +4.3%
Russia (TRF) 15.05 +0.1% +4.0%
Lat.America (ILF) 45.57 +0.2% +1.1%

Sector ETFs
Symbol Price
Change
52-Wk
Construction (PKB) 18.33 +0.3% +41.7%
Media (PBS) 17.33 -0.2% +25.2%
Financials (IYF) 63.70 +0.1% +24.6%
Consumer Svcs (IYC) 91.15 +0.1% +24.6%
Water (PHO) 21.95 +0.6% +23.2%
Insurance (PIC) 18.60 -0.1% +21.8%
Health Care (IYH) 88.30 +0.2% +21.2%
Real Estate (IYR) 67.38 +0.6% +19.9%
Software (PSJ) 28.14 -0.1% +18.4%
Telecom (IYZ) 24.48 +0.7% +16.6%
Defense (PPA) 21.68 +0.2% +16.1%
Industrials (IYJ) 77.16 +0.8% +15.7%
Retail (PMR) 25.85 +0.4% +15.1%
Big Tech (QQQQ) 67.07 -0.2% +14.2%
Biotech (PBE) 24.61 +0.9% +14.2%
Transportation (IYT) 101.39 +0.2% +10.3%
Utilities (XLU) 35.68 +0.8% +5.6%
Basic Mat (IYM) 71.99 +0.4% +4.6%
Nanotech (PXN) 6.37 +0.6% +0.2%
Semis (PSI) 14.94 -0.3% -0.6%
Alt. Energy (PBW) 4.33 +0.0% -23.9%

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