Whatever potential problems there’s out there, be it interest rates, tax hikes, inflation, Middle East, the dollar, shrinking profits, commodities, the fact remains: this market is a bull market, and to many disappointed pessimists and bear disciples, this rally might continue to rides it self another 22 % by then end of this year if we stand by what some chart historian analyst had to say.
Chart historians at the spoke securities have identified five periods since 1935 that are similar to this rally we are in now. Incredible as it might seem, in each of these periods the stock market gained another 22% on average over the following year.
Several factors are driving this market that is comparable to the previous ones which are:
- corporation earning are very strong, even more than what analysts expected.
- valuation is not out of alignment, this market during the decline and the rise has remained within a 13 to 15 P/E and right now it’s at 14 and will carry that throughout the year.
- inflation is something we are going to have to deal with, but it’s a long runway, and it’s not something that we are going to be dealing with right away. It may take another 12 to 18 months, leaving more room to go here.
Now, that is certainly something to consider when analyzing future possibilities in this stock market.