We are at the dawn of a history moment

superxy

Next week, at most in the next 2 wk, Market will move north of 1220 and
finally  come out of the shadow of the deepest recession since the great
depression. over the last two weeks, all 3 index finish testing the 10wk
line and ready for the decisive move.

in term of historic comparison, this is very similar to the winter of 2004,
after the slaughter of 2002, market ran a steep reversal in 2003 and reach
the cliff of final down leg at about 1150, and it took almost the whole
summer and fall of 2004 to finish the handle. By the end of Oct, Market
decidedly march north and break 1150. It was the time when people realize
the recession is "over". The correction of 2010 is deeper and shorter
compare to the 2004 one, and therefore gives a feeling of more volatile, but
still within 38.2% retracement, which indicates a likelihood of breakout.

mention of 2004 remind me a few things: that year i got a few dollars left
after paying the necessities. first thing i did was wiring some money back
to China for 定金 of a nice upscale condo that was just start construction.
I bought blindly because i didn't have time to go back. Just have a feeling
that when people get rich, what they want first is a decent living space,
not crowded in a small room with 3 generations. (it turn out right, most of
my colleagues were telling me buy RE in the US coz that was the THING at the
time). The rest of money i put in a amtd account and started investing (not
trading) myself. From MSN money's fund screener, i pick up EEM, EWZ, EWW.
all three were emerging market ishare funds. at the time, guru was saying
don't put over 5% in the emerging market. hell, all 3 beats spx by a wide
margin.

when talk
about trailing PE, most people refer to the "12 month trailing PE" ie the "
current PE". from this page on SP500's web site (http://www.standardandpoors.com/indices/market-attributes/en/us), you can find the raw data in spreadsheet. i see the current PE of sp500 as of last quarter is 14.97(base on operating earning, taking out one time charge). too see another period that has the same number 14.XX, you have to go all the way back to 1989-1990. Back then, investing is a few rich people's game. buying and selling requires a call to the "full service" broker and cost a percentage of the value traded. Internet and flourish of discount brokers have greatly increased the participants and fund in the market. I have to say the market is fundamentally different for the last 10 yrs compare to anytime before. and the average 12m trailing PE of last 10 yr is 19.32

another way to look at it is the actual earning per share, which is 21.43 as
of last quarter, estimated 21.68 for this quarter. that is at the level of
early part of 2006, when spx was at 1300 level. unless market anticipates
another sharp downturn in earning (double dip recession for example), we are
at a 15% discount by historic standard, no counting inflation of the last 4
-5 yrs.

nasa1100