S&P 500 nears long-term target

Price at time of writing – 1761.

With the Dow Jones Industrials closing in on my target level of 16,175 (currently 15,615, at last Friday's close), today I look to reaffirm the correlation between it and my target on the broader S&P 500 index.

To refresh our memories, in my last update on the S&P 500 on 23 September I reiterated a buy or 'stay long' policy with a target price of 1791. This recommendation remains intact. 

I also noted that the index had already outperformed the Dow since their unique lows formed in March 2009. Whereas we are currently waiting for the Dow to complete a 150% rise from that low – and fulfil my target level at 16,175 – the S&P arrived at this milestone in May this year. Gann-theory bulls might now argue there is every chance the index will push on to fulfil the next target in this 'quarters' sequence, completing a 200% rise. If this were to occur, it would please those that like round numbers, taking the index to a precise reading of 2000. 

I am more cautious, however. A further 30-point rise to 1791 would complete a 66.66% move from the secondary (but still important) low that formed in October 2011. This requires an advance of just 1.7%. Although the Dow requires a slightly larger 3.6% rise to fulfil my target, this remains an excellent correlation, and well within the acceptable margin for error.

Whichever way I cut and dice it, US stock markets are near to fulfilling my long-term targets, and appear set to confront a period of resistance. 

Recommendation: stay long. Prepare to take profit at 1791.

S&P 500 chart

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