The S&P 500: A Historical Perspective
Looking at 2013 through the lens of 1987.
With the stock market continuing higher—we touched on our current field position yesterday—I wanted to offer some historical perspective.
In some ways, this juncture feels very much feels like 2003, while in others, it reminds me of 1987 (minus the March to May consolidation).
I've included the 1987 S&P (INDEXSP:.INX) chart below, as well as the year-to-date 2013 chart, for comparison. Two items stand out; first, you will note that in '87, the S&P was up 22% on May 7 (vs. 14% today) and second, in 1987, the S&P rallied an additional 14% before getting tagged for a 36% three-month descent (which, at the time, took the S&P to a 10% loss on the year).
We can do with this information what we wish, but it does provide some perspective: Market moves can last a lot longer than an individual can remain liquid, and of course, timing is everything.
Hands over eyes, the bulls can do no wrong, but as always, two-sided risk remains and we would be wise to define our exposure through a stair-step lens. As it stands, and consistent with what we discussed earlier, S&P 1560-1680—or, 1590-1640, if you want a tighter market—is the zone; Mr. Valentine has set the price.
As always, I hope this finds you well.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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