The Mother of All Analogs (Update)

  • Posted by on May 8th, 2013 at 8:42 pm
  • Comments: 0

A few months ago we posted these two charts comparing the S&P’s run from Aug ’66 – Jan ’80 and Aug ’98 – Jan ’13. The correlation was eerily similar as both depicted relatively steep climbs and drops over roughly the same period of time…give or take a year.

Flash forward to today and the all time highs we’re seeing on a daily basis.  Here’s the updated charts (log scale):

(click to zoom)

S&P - 15 years

S&P ~ 15 years

The chart above shows that from 1973 to late 1980, the S&P climbed about 17% from peak to peak, and before that declined trough to trough about 14% between 1970 and 1975.

…

The chart below shows that from 2007 to date, the S&P has only climbed 4.5% from peak to peak.  The reason I say “only” is because it feels like this market wants to keep running.  I haven’t sensed any euphoria from the unwashed masses.  Mom and pop don’t care about this market…yet.

S&P ~ 15 years

S&P ~ 15 years

Who knows, maybe it will take a 15% rise from the 2007 highs to make believers out of everyone and their crazy uncle.  If that happens we’re looking at S&P 1800, probably in the next year or so.

Of course all this may just be a figment of my imagination, but if the S&P were to hit 1800 by next year I’m going to straight cash!  j/k  But on a side note, after the market peak of 1980, the S&P declined about 25% through mid 1982…  Whoops!