Carbon Copy 2.012

Back on August 31, 2011 we made a prognostication that saw the market close of 2011 mimic that of 2010 (“Could 4Q 2011 be a Carbon Copy of 4Q 2010 for Equity Markets?“). We thus predicted the S&P would rally +20% from its August 22, 2011 low of 1,123 to close the year roughly between 1,330-50.  Though our forecast fell short of our year end target, closing at 1,257, the market commenced 2012 in strong fashion by breaking the 1,330 mark as early as February 3, 2012 and then shooting passed it to a high of 1,419 on April 2, 2012 for a total return of +26%.    The chart below illustrates the market performance since our forecast, depicting a stellar return for those investors who ‘toughed it out’ during an extremely volatile market environment. The roughly +33% trend from August 2010 to May 2011 can likely reoccur from August 2011 through the summer, which would mean the market could reach 1,500 on its current trajectory. Recent posts allude to our November 2012 target of 1,500 based more on fundamental and psychological analysis before considering another major correction scenario.

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