Let (us) ‘ME’ talk a bit of perspective. From Jan 1970 to Sep 2010___the S&P 500 returned: April +1.3; May +0.72; June +0.15; July +0.44; August +0.23; Sep -0.65.
I have an estimate for the S&P 500 2013 earnings at 103-108. I believe that price earnings ratio’s of 15 to 15.5 will become the norm. This equates to a range from 1545 to1674. The upside of that range would require the multiple to expand.
Here is the problem: We experienced some fear in the markets (presumably EURO related) during the summer thru fall of 2011. But we have not had a ‘health supporting correction’ for some time. We are about 50months into this bull-run without more than a 9.9% correction in the S&P 500 index.
The overall markets would seem overdue for a ‘health supporting correction’. Over the last 6 weeks every time sectors fly__I have been pruning some cash. But that is what is important. I am referring to sectors. I posted the S&P 500 historical performance. What really gives perspective is the relative difference between the10 sectors. The sector performance when placed within overall expansion/contraction cycle of major economic cycles provides indications to the future.
I know Jim Cramer gets misaligned a lot. Jim and before him Sam Stovall and his son Sam Jr; Martin Pring and John J. Murphy have published intuitive information on sector analysis.