A Milestone: The S&P 500’s 4,600 Level On The Bull Plateau

Introduction

On Dec 8, the S&P 500 (SP500) clinched the 4,600 level for the first time since March 2022, closing at 4,604.37, after having the benchmark at the intraday basis in a couple of days. A rounding number such as 4,000, 4,500, or 5,000 is not important but the financial news media and some commentators in the bear camp made those numbers as the memorable cornerstones.

As a lifetime bullish investor, as always, in either bull markets or bear markets, I have not placed any heavy weight on any particular number on the market, and as a writer, I have not predicted the market in terms of any prices, but only in terms of a time dimension, such as years.

Why the 4,600 level in particular? Because I am writing about the bull plateau, bears think this is a “bear-market rally”, so many readers, bears, or bulls may want to know the number rather than years.

Secondly, more importantly, ironically, bulls and bears are in the same boat, wishing that 1) the current rally would not shoot to the moon, and end the rally, 2) Or would barely float at the same level for longer than a time horizon such as a couple of months.

The Focus

The post demonstrates why the 4,600 level is not only a convenient rounding number but also has a significant Substance.

A messiah Bernanke and Covid-19 Pandemic

The seed for the current bull plateau was sown in the GFC (Global Financial Crisis) in 2007-08, ensuing the GR (Great Recession), the SBM (Super Bull Market in Mar 2009), and the GE (Great Expansion) in Jun 2009), meaning to back to the 2009 origin.

The messiah was Ben Bernanke, Chairman of the Fed Reserve, who initiated the enormous amount of liquidity in the U.S. and globally, and adopted the 2% inflation target (which started in New Zealand) in the U.S. officially.

In 2019, the Covid pandemic erupted in China and spread swiftly across the globe. All countries helped people financially and with vaccination. The market and economy were disrupted but recovered very fast, by the stimulative fiscal and monetary policy.

The market, however, had been severely disoriented by the questionable “recession” call in Mar 2020 by the NBER (National Bureau of Economic Research), and an invalid “bear” market, in my opinion.

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As shown in the three Tables above, the current market on the bull plateau is strong enough to avoid a recession, or in other words, to get a “soft landing”, but also, sluggish enough for the bull plateau to last for at least 3 years, in my view.

The Special Features of Table 1

Table 1, includes Oct 30 (M) and Oct 31 (T), and Nov (1 – 30) on top of Dec (1 – 8), containing 29 dates. The reason to display a somewhat lengthy table is 1) a very rare case of 8-days consecutive advance from Oct 30 to Nov 8), and 2) the 5 dynamic shifts from 4,100 (Oct 26 (4,137.23) and (Oct 27 (4,117.37, a low), both dates are not included in the Table) to 4,600 on Dec 8. Among 29 sessions, bulls lead bears by 20 vs. 9, exhibiting a quite bullish market now.

For less than 2 weeks from Oct 27 (4,117.37, a low) to Dec 8 (4,604.37, a high), the S&P 500 (SPY or the U.S. Economy) moved: 1) Nov 1 (4,100 to 4,200), 2) Nov 2 (4,200 to 4,300), 3) Nov 10 (4,300 to 4,400), 4) Nov 15 (4,400 to 4,500), and 5) Dec 8 (4,500 to 4,600).

We have not printed this kind of rapid and consistent ascent since 2016. A 12% rise in 2 weeks is justified as a recoup of the market loss during the barren 3 years from 2020 to 23. The market would slow down in a couple of weeks.

Any readers to want to know the original source of the PPO approach, the Uptrend, and related indexes, please click this.

The Uptrend as of Dec 8 (F)

Table 2 reports as that “P” had an edge over “m” on 8″P”s (1) and 5″P”s (1), while “m” had only on 2″m”s (1), registering that bulls vs bears are 20 (=18 (Nov) + 2 (Dec)) vs 9 (= 5 (Nov) + 4 (Dec)), as of Dec 8.

Table 2 reported the Friday votes as “P” vs “m” was 7 vs 3. This second criterion supports the above primary one, in a similar fashion.

Putting two Tables together, the current 8 month old Uptrend firmly rides on the bull plateau, but we really want the Uptrend somewhat will slow down in the coming months

Cash Cows on the Bull Plateau

A cash cow is a product or service that generates persistent gains over a long period of time for the company that sells it. The term cash cow is a metaphor for a cow used on farms to produce milk, offering a steady stream of income with little maintenance.

Cash cows are products or services that have achieved market leader status, and provide positive cash flows. The idea is that such products produce profits long after the initial investment has been recouped.

Cash cows can be also used to buy securities (individual stocks or stock/bond ETF (Exchange Traded Mutual Fund) as an instant-term (a few seconds or a few sessions) trading online. They usually bring in cash for years, until new technology or shifting market preferences renders them obsolete.

Table 4 logged 79 securities that gained average gains of more than 1%, (which were selected from TD Ameritrade brokerage account) and is placed in the reference section of “Cash Cows” after the main text because it is too long.

Readers can review them. Most securities are well-known, but some are very small-cap risky ones. Some speculative stocks (which are not many), such as ANGI, HOOD, KOSS, and NVAX, have contributed with some pretty higher rewards than the bigger brothers.

This is not a recommendation. The purpose is to provide information about some trading vehicles.

The Concluding Remark

The bull plateau or “bear-market rally” has been working as smoothly as bulls or bears expect, but bears and bulls are exactly opposite each other: The former are anxious to see the end of the tunnel shortly, while the latter are so busy in trading with some reliable cash cows.

All valid data points agree with bulls so far, hinting at year-end rally, the year-start rally, the 2024 rally, the 2025 rally, and perhaps the 2026 rally.

The bull plateau would perform systematically, cooperating timely with the SBM. the Uptrend, the TDI, and the SDI, and generating abundant fruits for an instant (a few seconds or a few sessions) trading with the well-selected Cash Cows.

Reference: “Cash Cows”

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