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S&P 500 and Dow synchronisation

Price at time of writing – 1710.

As the Dow Jones stands 4.68% short of my target at 16,175, it's worth taking a look at US stock markets via the broader S&P 500 index, in an attempt to confirm a correlation between the two.

All trading involves risk. Losses can exceed deposits.

Conflicting technical analysis would be a concern, providing a mixed message for those exposed to US equities. For the record, my recommendation on the Dow remains to stay long, with the target unchanged at 16,175. 

If it appears that the Dow has provided stellar returns over the past few years, the S&P 500 has had its measure. The central plank on my current Dow target is derived from analysis suggesting the index will complete a 150% rise from the unique low of March 2009. However, the S&P 500 has already achieved this milestone, at 1667, in May this year. Traction above 1667 now allows me to seek out the next band of resistance. 

The obvious place to begin is to double the 33.33% rise from the significant low in October 2011 to one of 66.66%, projecting a line at 1791. In support of this target is a line representing a 16.66% rise from the minor low last April. Measuring from last Friday's closing levels, to fulfil this projected target at 1791 would require a further advance of 4.73% on the S&P, mirroring precisely the 4.68% required by the Dow to fulfil its own major target. With these two major US indices in such close synch, it bodes well for an eventual fulfilment of my long-held Dow target.  

S&P 500 index chart

 

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