The S&P 500 is now within 1% of its all-time highs, while the S&P 500’s Total Return Index (which includes dividends) has already made a new all-time high vs. its January 2018 high.

This proves that predicting the market’s medium term and long term direction isn’t about “guessing” where the market will go next. It’s about focusing on the data in an objective manner.

With the S&P 500 close to making a new all-time high, some people are betting that the stock market will make a marginal new high and then peak.

That is highly unlikely. The stock market will probably make a new high and then rally over the next few months.

Today’s study

The S&P has gone 6 months without a new high, and is now close to making a new high. When this happens, the stock market’s medium term (3-6 months) forward returns are VERY BULLISH

Click here to download the data

As you can see, the S&P 500 goes up almost every single time in the next 3-6 months.

Why?

Imagine a rocket that’s fueling up. The longer the rocket fuels up, the higher it will eventually blast off. The S&P 500 has been consolidating in a wide range from January 2018 – present by swinging sideways. This “consolidation pattern” is akin to a rocket that’s fueling up. When the rocket (S&P 500) makes a new high and starts to blast off, it does so with a renewed sense of vigor.

Click here for more market studies.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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