Weekly Chart Review

History doesn't repeat itself, but it often rhymes...

Over the last month or so, I’ve made the following comments in this newsletter regarding the current strength of the US equity market:

“The S&P 500 remains “Max Bullish” in our “Asset Class Review” model and seemingly has plenty of room left to run with resistance not until 5,886 and then again at 5,980.”

“Almost all of the US equities we track are currently “Max Bullish” AND seemingly have plenty of room to run on the charts before encountering overhead resistance.

• Translation - this is probably not the time to get short.”

“The market is extremely bullish right now.”

“It’s not inconceivable to think that we’re currently living in a period that is similar to the “melt-up” that we saw in late 1999, early 2000.”

Fast forward to today, if you scroll down to our “Asset Class Review”, you’ll find that 22 of the 25 US equities we track are currently ranked as “Max Bullish”.

Net/net, the bullish theme remains and I sense that it will likely continue through the election on November 5th.

With that said, I was speaking with a good friend last week and he reminded me of a few similarities between 2007 and 2024.

Specifically, the following:

• 2007: After raising rates to 5.25%, the FOMC initiated its first rate cut of the cycle on September 18, 2007, when they cut rates by 50 bps.

• 2024: After raising rates to 5.50%, the FOMC initiated its first rate cut of the cycle on September 18, 2024, when they cut rates by 50 bps.

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• 2007: On October 9, 2007, the S&P 500 set a new all-time high with a close of 1,565.15.

• 2024: On October 18, 2024, the S&P 500 set a new all-time high with a close of 5,864.68.

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• 2007: A recession began in December 2007, ultimately ending in June 2009.

• 2024: TBD

That conversation, and the similarities discussed, got me thinking about whether or not there are any other potential similarities from a technical and/or S&P fair value model standpoint.

Here’s what I found: