SPX -- Monthly

Here's a link to the longer term SPX with indicators that you can keep or change as you
wish. SPX Monthly

Observations
For the fun of it, the SPX back through 1994 is included. The first bubble started in 1996
and the run up into 2000 is a terrific reminder of just how powerful a real bubble is. I
tend to use 1994 as a base, and from the SPX levels then, the SPX has compounded before
dividends by 7.2% per year compared to net per share of 6.6% So, excluding the bubble
and its echo (2004 - 2007), the market has done very well by my lights. To get back into
bubbly mode -- above the top of the very long term channel dating back to 1946 -- the SPX
would need to move up close to 1700 this year, at which point it would move into hyper-
extended mode again.

At the 1569 level, the SPX is getting rather extended on a cyclical as well as a longer term
basis. The risk in the market has risen sharply since that woeful low back in 3/09. Recall
too, that with the US and the global economy in slower growth modes, it is positively heroic
to project the 9.4% profit growth seen over the 1995 - 2013 era well into the future. Bull or
bear, it seems wise to scale back expectations going forward even recognizing that the bears
and other cautious folk have underestimated the ability of corporate America to wrench
continued gain in profit margin.

The behavior in MACD, notwithstanding its recent strong positive showing, is reminiscent
of well evolved cyclical mode and the 50+ is pretty high for post bubble action. On the plus
side, RSI is in a clear uptrend off the cyclical low and is not yet extended. The bottom
panel of the chart shows a 12 month momentum measure which is strong but is still running
below the "hot" 200 level when the SPX has started to veer toward trouble in the past.

I am seeing more strategists raise their projection for how the SPX will close out 2013. A
rise to the 1650 - 1700 area is gaining in popularity. This range implies an acceleration of
earnings and continued growing  investor confidence the Fed's ZIRP and large QE programs
will win out against the obvious attitudinal and economic headwinds in place. Note as
well that lots of guys out there simply play "extend a trend" which would put the SPX at
1700 at the end of this year off the autumn 2011 base.