One question top of mind of many readers is whether the stock market will crash in 2017, after a gigantic 7 year bull market.
Though the “7 bear bull market” argument is definitely a valid one to take into account, it is not per se a condition. A long bull market can also get longer, and we do not know at this point whether we will see a “mania phase” first.
Another argument was posted on Forbes Will There Be A Financial Crisis in 2017 in which the author aruges that there has been a financial crisis in the seventh year in three of the last four decades: 1987, 1997, 2007. There again, we do not consider this a convincing argument.
We remaind convinced that a stock market crash in 2017 should have early signs in 2016. We do not see that. We stick with our recommendation to remain focused on what prices are doing. Price analysis lead us to the following conclusion which we explained in detail in our July analysis S&P 500 Suggests Much Higher Prices Coming In 2016 And 2017:
The fact of the matter is that U.S. stock markets are trending higher, and will trade much higher in 2016 and 2017. We could find this counterintuitive, but that’s not important, that is an opinion which falls in the category “noise”. The charts are fact based, and that is the only thing that matters.
When examining ongoing price action in the stock market chart, we see many things, but certainly NOT a stock market collapse in 2017. If anything, the retracement in September tested the 2016 breakout level, which we consider an incredibly bullish sign.
In other words, the stock market collapse story could work well as a “story” to sell pageviews, but it is not a serious thesis when looking at a chart.
As the chart above illustrates, The S&P 500 clearly broke out after a consolidation period of almost two years. This is a huge breakout, and it points to much higher prices in the coming 12 to 18 months.
This breakout was followed by a retest of the breakout level, which was 2,100 points. We consider this a confirmation of the breakout, and see consequently an end-of-year rally developing right in front of our eyes.
The iShares S&P 500 Index ETF (NYSE:IVV) was unchanged in premarket trading Tuesday. The second largest fund tracking the benchmark S&P 500 index has risen 5.87% year-to-date.
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