Back on 9/27/15, I made a projection for the SPX to close out 2016 around 2160. The market has
been volatile since then, with a rally off a double bottom in Jan. / Feb. in the low 1800s carrying
up to 2064 currently. SPX Chart
Presently, the market is positive on 3 - 6 months basis, but is heavily overbought in the short run.
Moreover, the earnings outlook for the SPX has deteriorated significantly over the past six months
from the Sep. 27 post, and it is now questionable whether the 2160 target is do-able. Specifically,
SPX net per share closed out 2015 around $101., and would have to reach $125. for year end
2016 to make the 2160 target a comfortable one to hold on to. My weekly leading economic
indicators have turned up during the first quarter of this year, but economic performance to date
been sluggish enough that the $125 in eps for the end of 2016 might be significantly on the
high side. I sure as hell hope it is not, but the economy has to strengthen sharply over much of the
rest of 2016, and, the oil price needs to continue firming up to produce the kind of earnings leverage
needed for the requisite strong gain in net per share demanded by the $125. number.
The conclusion today is that the SPX at levels over 2050 is generous with earnings struggling
below the long term trend. As very much a pro growth guy, I would be delighted to be proven too
conservative, but business progress is too slow so far.
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