Could We Get a 7-Year Double Top on the S&P 500?

This really isn’t a prediction as much as it is just mere speculation about what could happen to the market in the coming weeks and months. Short term movements don’t really concern me as I mostly just focus on undervalued companies regardless of market level, but sometimes it’s still interesting to point things out.

A lot is being made about the Dow making new all-time highs lately, but as many of you know, the S&P 500 is still about 3 percent below its peak from the year 2000 at the 1,527 level. Here’s a 10-year chart of the S&P 500 index:

One possible scenario would be for a long term double top around that level. A lot of strategists are dissatisfied with the 7 percent correction we got in March and want some kind of retest of that level, or even better, a full 10 percent correction in the S&P 500 so we can get that monkey off our back.

Is a double top around 1,527 the most likely scenario? Of course not, but it’s still interesting to think about. I definitely would not rule it out and it would make for some good headlines. The market is clearly overbought, so if we truly need another pullback, as many seem to think we do, what better way for it to play out? It would make for a very intriguing chart pattern, one that technical analysts could cite for years.

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3 Thoughts on “Could We Get a 7-Year Double Top on the S&P 500?

  1. hmm… that’s a really interesting chart pattern you’ve noticed. I was impressed that in the short run the S&P seems to have managed to reclaim the gap from 2/27 and was thinking that maybe there might be clear skies ahead for further appreciation but I guess we’re seeing very quickly another important testing level which is that of its all-time high in 2000. Thanks for pointing that out as I do believe that the 5-7% we had in 2/27 and the subsequent rally just aren’t a satisfying enough correction to be meaningful.

  2. Anonymous on April 22, 2007 at 3:54 PM said:

    A seven year double top is consistent with an eighteen year bear market. Long slog coming.

  3. Anonymous on June 21, 2007 at 2:48 AM said:

    http://www.nowandfutures.com/buscycle.htm

    fits well into the princeton cycle…

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