The S&P is once again in record territory and it’s almost a yawn now because this index has been topping itself off and on for over a month.
How high will it go? Good question and one person’s guess is as good as another’s.

We think that 1900 is possible by Mid-January and that probably is conservative. There are several continued fundamental reasons for this roughly 10 % move to the upside. As we have said before, low interest rates, decent to strong earnings reports, and the big one, no better place to put money.

One thing we really haven’t seen or heard is that dreaded move into equities by the retail sector. This movement of retail money is typical of a toppy market and we haven’t seen it yet.

We think that individual investors fear of the market is only partly to blame. It’s probably a residual effect of the financial crisis and investors move to lower debt and catch up on purchases they forgo during the financial crisis. Money being spent buying cars, houses and new appliances isn’t a bad thing but it does little for market dynamics.
We do expect the retail investor will be more involved in the coming months and that may make us rethink price targets but until that happens we do think there is another 10% in this rally and we will stick with that number.

The week coming up may be one of hype but no substance as the Fed meets and will make their monthly announcement on Wednesday. We do not expect anything substantial to come out of those meetings for the reasons we mentioned last week.

The government shutdown delayed data but there really wasn’t anything earthshattering in the data anyway. We didn’t miss it, we didn’t need it. Now we get it again and it really isn’t moving the Fed so who cares.
However, we need to see it anyway and here is the list: Pending Home Sales, Retail Sales, Consumer Confidence, Jobless claims and Chicago PMI. An interesting data set will be the ISM Mfg index. Dig through it and find what others are missing.