Following the financial crisis, it took the stock market a handful of years to make new all-time highs again.
In fact, it wasn’t until 2013 that the S&P 500 Index (SPX) broke out to new all-time highs.
In today’s chart post, we are going to use a simple technique for identifying upside price targets: Fibonacci extensions.
If we measure the distance between the 2007 highs and 2009 lows on the S&P 500 we come up with 910 points (1576 – 666). So a 100% retracement of the financial crisis losses would take us right back up to 1576. Using Fibonacci retracements – 1.618% – it puts the S&P 500 at 2138.
Note that the S&P 500 Index was magnetized to this level before hitting it and enduring a very long “pause”. See the chart below (embedded in my tweet).
Is there another upside price target that could act as a price magnet? How about the 2.618 Fib Extension? That level resides at 3048.
Although timing can be tricky, I think it’s fair to say that the S&P 500 will hit 3048 in the months ahead. Will it be magnetic (causing the market to hit it this year)? Will the market pause at this level? Great questions. For now, put it on your radar.
Note that the following MarketSmith charts are built with Investors Business Daily’s product suite.
I am an Investors Business Daily (IBD) partner and promote the use of their products. The entire platform offers a good mix of technical and fundamental data and education.
S&P 500 “monthly” Chart – my 4/17 tweet:
— Andy Nyquist (@andrewnyquist) April 17, 2019
The author has a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.