S&P 500 long term trend analysis - Where to from here?

1 thg 2, 2022

There is no doubt that the S&P 500 is expensive on almost any valuation metric. If one "zooms out" a few things become overwhelmingly apparent. The first is that pre-great depression and dot.com bubble, the index was well above its average trend line as it breaks into the blue shaded area. Currently the index has broken into the blue shaded area whilst testing the support of the upper green band.

During 1955 and 1973 the index continued to rise whilst the upper green band acted as a resistance line. The question is, could history repeat itself whereby the index continues to rally along the upper green band with minor retracements along the way or will it continue to rise towards the upper blue band and thus perpetuating the feeling that the index is in bubble territory (extreme greed).

if interest rates remain relatively low compared to historical standards and given the quantity of money in the system (QE) could the index remain more expensive than we are typically used to?

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Please note, this idea is shared for educational and discussion purposes only and should not result in speculative investment decisions in any asset class.