Is there a mental blockage at 18K? It seems that every time we hit above it, the forces of Thor somehow smack it back down. I am thinking heavy at 16.5, then at 17.8, stop........ Heavy at 16.5, then at 17.8, stop. Ride out the little waves at 18 and then wait for the next 16.5. It seems to be eerily easy to forecast lately.

Nothing too specific, just generalities. Where do you think we will be at in 12 months and why? Forecasts are all over the place.

Generally speaking, past performance has shown that the stock market historically goes up 2/3 of the time. This historical fact favors the long term investor who patiently waits for the pullbacks to enter the market and takes judicious profits to rebalance. My biggest mistake was squandering all those years and not investing. I'm a Johnny Come Lately who is trying my best to catch up.

Considering the issues that have come up over the last year, I don't think it's a mental blockage....I think we're fortunate to have kept it close.

The gas glut has stagnated a lot of industry. Greece still isn't solvent (and Porto Rico sets a dangerous precedent) and the European Union continues to have issues. Hard to stay confident with all that.

18 is a pyshcological barrier of sorts, but it is also what the technicians call 'resistance'...Once broken through decisively ( it broke once last year to 18.3...) it often becomes what they call 'support'...much like the 16.5 you noticed is....

I don't have any more clue where it'll be in 12 months than I know how to build a spaceship...

Look at the 10 year DOW chart if you want to see where it is heading. Looks like a triple top reversal formation building.

[img]http://www.marketwatch.com/kaavio.W...;height=444&width=579&mocktick=1[/img]

Sell in May…..then go away.

I suppose there is some "mental" block over the 18,000 number as there was at 10,000, 15,000.......
The market will go way beyond 18,000 and may drop well below it again.
But being in the market, being diversified and disciplined has treated me very well over a 30 year period. And it should have done the same for others who had a diversified and balanced portfolio over a long period of time.
I wouldn't worry about it.

As more and more positions are held at highs.....

Time is your friend.

The P/E ratios currently don't support a DOW much above 18K. If you have a pick up in corporate earnings or sentiment they will be increasing in the future, the market indexes will rise. With the economy stuck in low gear, you aren't going to see much movement across the broad market.

The economy is not booming now. Not really a complete bust, either. We're in that lull phase where you're see a a move down of 500-1000, the traders buy/sell, then it goes back up to 18k, and they take their profits.

Not enough bad news to drive it way down. Certainly not enough good news to get it up. If a Republican is elected in Nov, I fully expect the Fed to start jacking up rates (out of spite), so that they can blame the subsequent 3-5k drop on the GOP.....

This is a good time to enter the markets. Market goes up 2/3 of the "time" (which is your friend.)

I remember in my younger years that I didn't have any money to invest because I was spending it all on stuff (on credit.) As i look back, I hamstrung my ability to create wealth for my family by failing to curb my appetite for stuff on credit. A disastrous combination. I would say to myself, ". . . if I put this money in an investment I can never touch it til I retire. I can't see that far into the future." I can certainly see the (heavenly) light at the end of the tunnel now!

Stocks Follow Overseas Markets Lower; Pfizer Early Dow Leader

KEN SHREVE 10:00 AM ET - IBD


Pfizer outperformed in the Dow early Tuesday on strong earnings.
(Frances M. Roberts/Newscom)


The stock market opened sharply lower Tuesday, hurt by more weak manufacturing data out of China along with a sell-off in European stock markets.

The S&P 500, Nasdaq and Dow Jones industrial average all fell around 1%.

Declining stocks outnumbered advancers on the NYSE by about 4 to 1. The ratio was 3 to 1 on the Nasdaq.

Gold added to recent gains as the dollar weakened again. It edged higher to just under $1,300 an ounce. Money flowed into bonds as the 10-year Treasury yield crashed 8 basis points to 1.79%.

In the stock market today, early gainers in the Dow included Pfizer (PFE). The drugmaker jumped 2% to 33.61 on earnings. It’s been working its way higher in a long consolidation, finding a new home above 32 and its 200-day moving average.

Who are the leaders in Pfizer’s Medical-Ethical Drugs group? Consult IBD Stock Checkup to find out.

Meanwhile, after eight straight declines, Apple (AAPL) rallied 0.8% in the early going.

Inside the IBD 50, a couple of defensive stocks continued to trade tightly and hold near highs. Prestige Brands (PBH) added a penny to 57.61. Constellation Brands (STZ) eased 0.2% to 157.45.

A couple of growth names are set to report earnings after the close today: AmSurg (AMSG) and Paycom (PAYC).

The market is priced pretty fairly right now, with P/E's in the 16.5 range, which is about the 50 year average.

Of course, interest rates are historically low, which you would expect to push P/E's higher. That 16.5 p/e is pretty much equivalent to a 6% interest rate (so your investment return is 6% plus whatever the value of the growth of the stock is).

In the current low interest climate, a p/e of 20 (5%) is probably not unjustified. Of course, since the market posts a forward looking valuation, expected future interest rate increases are already figured in the price.

With earnings where they are, I don't see the markets go up or down much, unless there's some external shock.

I get a real kick out of all of these brainiacs who have these blogs, newsletters, etc about investing. If it were that easy we'd all be gozillionaires, and so would they. Nowadays the markets are for the big money boys, not the little guy, IMHO.

Good advice. Check back with me in November.

If I knew the future I'd quit going to work...

When I first started investing I wasted hundreds if not thousands of dollars on the investment newsletter subscriptions. All you need is a free signup to "Seeking Alpha" and a few books.

Right, get in at the very top!

Very few people can time the market successfully. Whatever level you decide to get in at, stay in and you'll likely make money over the long run.

the Market is going to belch, has to. then everything will settle down and quality, under priced stocks will be available at a fair price. but if you just buy in every month through your 401k it wont matter much what you do because you'll be cost averaging. just don't get greedy and try to hit the lottery and you should be fine. i have set aside some cash reserves this last year though just to go shopping at some point should a opportunity arise.

Our stock market is artificially inflated by the Federal Reserve (and other big banks who are playing the stock market instead of loaning money) and by big corporations buying back their own stock (there are very few individuals investing in our stock market). It is also inflated by our government with their "War on Drugs" which makes dealing illegal drugs an incredibly profitable industry. Most of the drug cartel's huge drug profits end up in our or somebody else's stock market. It can't go on like this forever. My goal is to get out of the stock market as soon as possible.

What is your strategy for getting out, and what is your time table, if you don't mind sharing?

Jobs and GDP reflect the value. Naturally these numbers appear to continue to languish. Stock generally falls before and election, and rise after an election independent of policy. I could see that mild swing, but the reality of a job base is not going away soon. Sustained growth in market number will shadow job growth.

Aww, why give away all the secrets......

Stock market predicts GDP, and fluctuates randomly around that trend line based on real and perceived shocks to the system.

Unless one is at or in retirement mode.

I'm not a expert on predicting stocks, but stock are not cheap. Unless we start pulling 3%-4% growth out our a$$, I don't see the point of owning any right now. Buy low, sell high, be patient for one or the other to happen. Nothing wrong with sitting in bonds for a while waiting for an opportunity to buy something cheap.

Let me help you with that:

12 NASA Blueprints For Building Your Own Spaceship

http://gizmodo.com/5832586/12-nasa-blueprints-to-help-you-build-your-own-spaceship/

Do it with trailing stop/sells. Lock in any upside and prevent the downside. 1st law of wealth is to not lose what you have.

'Normal' Returns Are Unlikely In A Far From 'Normal' Environment

May 3, 2016
9:11 AM ET

Thomas J. Feeney
Investment advisor, macro


Summary

* Historically normal market returns on average follow normal market and economic conditions.

* Risk-free returns, longer fixed income, common stocks and economic conditions are far from normal.

* It is highly likely that securities returns over the next decade or more will be far below normal.

Almost all investors have at least a general familiarity with the long-term performance record of stocks, bonds and cash equivalents. Over the 90-year span from the end of 1925 to year-end 2015, common stocks provided an average annual total return of 10.0%; Intermediate U.S. Government Bonds 5.3%; and risk-free U.S. Treasury Bills 3.5%. All this transpired in an environment marked by an average inflation rate of 2.9% per year. Substituting corporate bonds or long-term U.S. Governments would increase the volatility of fixed income returns but do little to change the 5.3% long-term return provided by Intermediate U.S. Governments. Deducting inflation reduces average real returns to 0.6% for cash equivalents, 2.4% for bonds and 7.1% for stocks over the 90 years studied.

If we could count on such average returns over any upcoming five- or ten-year period, portfolio construction would be decisively simpler. Over the decades, however, history has taught us repeatedly that many factors conspire to make decision-making very difficult. Performance of the major asset classes frequently varies dramatically from long-term averages, occasionally for extended periods of time.

Most investors are astounded to learn that risk-free cash equivalents have outperformed both stocks and bonds for several very long periods of time. Over more than half of the twentieth century in three distinct stretches (1903-20; 1929-49; 1966-82), unmanaged risk-free cash equivalents outperformed common stocks. And for more than 40 years from the early-1940s through the early-1980s, cash equivalents also outperformed a typical broadly diversified bond portfolio.

Unfortunately, no one is kind enough to ring a bell announcing the inception of those lengthy periods of stock and bond underperformance. We have to examine available evidence to determine whether we should expect historically "normal" returns or, perhaps, something very different. Evaluating today's conditions, we see little that looks "normal".

Thanks to the Federal Reserve, risk-free return has been essentially non-existent for eight years, robbing the elderly retired of any return if they were unable or unwilling to accept the investment risk of other asset categories. This is not only not "normal", but unprecedented, with the yield below even the minimal risk-free returns of the Great Depression.

The yields on longer fixed income securities are not appreciably better, resting at or near all-time lows throughout most of the world. Many have absurdly descended into negative territory, thanks again to the geniuses at work in a number of central banks. At such levels, yield is non-existent, profit potential severely limited and risk levels extremely high. Nothing "normal" here.

Common stocks are currently priced near all-time valuation highs. A composite of commonly employed valuation measures (stock market capitalization relative to the size of the economy, price-to-dividends, price-to-book value, price-to-earnings, price-to-sales and price-to-cash flow) is higher than ever before in U.S. history but for the period immediately around the dot.com mania at the turn of the century. From that price peak, stock prices were more than 50% lower nine years later. Nobel Prize winner Robert Shiller's research, covering the years since 1881, demonstrates clearly that far below average returns consistently follow periods of far above average valuations. From current levels of valuation, "normal" real annual returns over the next decade or more are likely to be either negative or low single digit positive. If history repeats, that period is also likely to encompass at least one major stock market decline, which could be similar to the two that we have experienced so far in the still young twenty-first century. "Normal" returns from such conditions are likely to be very different from the 90-year "normal".

The U.S. and world economies are in danger of far below normal progress in the years ahead. The international Monetary Fund, the Organization for Economic Cooperation and Development and the World Bank have for several years been reducing their estimates of economic growth worldwide. That growth slowdown has been more persistent and far more severe than economists have anticipated, despite the most aggressive monetary stimulus in history. Notwithstanding some recent growth, the U.S. is still experiencing its slowest recovery from recession in more than three-quarters of a century. Reflecting a drying up of global demand, global exports have recently declined year over year, a condition occurring only during U.S. recessions in the past quarter century. Whether a recession is pending or not, it is likely that we continue to face a far below "normal" economic environment.

Over many decades, common stock prices and corporate earnings have grown at roughly the same rate, although not always in lock step. While stock prices have continued to climb, corporate profits are approximately unchanged over the past three years--far below a "normal" rate of growth. Stock prices have clearly outrun corporate earnings. Earnings and revenue guidance for the period immediately ahead is tepid at best.

The most serious ab-"normal" condition facing investors and society in general is the extreme and dangerous level of debt built up both domestically and internationally. In their attempts to rescue the U.S. and major world economies from the financial crisis and to sustain growth during the lethargic recovery, central bankers have created unprecedented levels of debt. In This Time Is Different, Carmen Reinhart and Ken Rogoff chronicle in great detail how excessive debt levels have led to extended periods of far below "normal" economic growth over many centuries in countries throughout the world. Today's levels of debt relative to the size of most major countries' economies are well beyond the danger points outlined in Reinhart and Rogoff's research. And history's greatest stock market declines have almost invariably unfolded soon after a period of extreme debt buildup.

What then are the prospects for securities over the next few years? Risk-free cash equivalents are likely to provide little over zero for some time to come if central bankers retain control. The singular advantage to cash, however, is liquidity, which buys the investor the option to take advantage of occasional dramatic price declines in other asset classes.

With yields on longer fixed income securities near historic lows, there is far more room above current levels than below. To make more than the meager coupon on today's bonds and notes, yields have to go even lower, and investors have to make a timely sale at those lower yields. The far more likely prospect of higher rates in the years ahead will lead to a loss of principal value--a bad risk/reward equation.

Despite very slow economic growth, stagnant corporate earnings and excessive valuations, common stock prices could still move higher if investors retain confidence in the willingness and ability of our Fed and other central bankers to support the securities markets. While possible, such a scenario flies in the face of what is "normal" with today's conditions. Add the issue of unprecedented levels of domestic and worldwide debt, and normal corrective price moves could be powerfully magnified.

Short-term traders may be able to navigate such turbulent waters, although very few hedge funds have done that successfully in recent years. Buy and hold investors face particularly difficult prospects. It is not inconceivable that a reversion to "normal" valuations could cut stock prices in half or more, as has happened twice since year 2000.

Many buy and hold investors expect to survive such episodes, painful as they may be, by just staying the course. After all, that's been a successful formula in this country during today's investors' lifetimes. It may be instructive, however, to look to Japan for cautionary guidance. At the end of the 1980s, the Japanese stock market was the biggest in the world. It had been rising inexorably through that decade, as Japan had come to dominate the automotive and electronics industries. Japan appeared to have the new industrial paradigm. As the excesses of their prior long strong cycle began to unwind, however, stock prices began to fall. So ab-"normal" were conditions that prices ultimately declined about 80% and today, more than a quarter century later, remain more than 50% below the 1989 peak. No one could have foreseen such an outcome when the Japanese market was near its top.

The fixed income portion of portfolios could simultaneously be damaged severely if interest rates should revert to historically "normal" levels. Should inflation rates also return to "normal", the purchasing power of bond proceeds at maturity would be markedly compromised.

There is no easy pathway to investment success in the years immediately ahead. As long as central bankers retain control, traditional approaches may continue to provide some success. Should current rates, valuations and conditions revert to historically "normal" levels, however, traditional approaches may be severely punished. In such an environment, avoiding major losses may become as important as seeking gains. Even very low-return cash equivalents may come to play a valuable role in preserving assets so they may be productively deployed at more attractive future valuations. In both equity and fixed income areas, proven strategic approaches are likely to be far more productive than a traditionally allocated buy and hold approach. Retirees or organizations with largely irreplaceable capital should be particularly risk-averse. There is very little "normal" in the current environment.

Thomas J. Feeney is Managing Director and Chief Investment Officer of Mission Management & Trust Co., Tucson, Arizona.

This...

Start as young as you can, save/invest as much as you can, for as long as you can. (of course eliminate debt as well..)

Just get started saving/investing, and take a long term approach and pray the last few years or so prior to you needing to tap your cash that the market doesnt dive.

I've been in the market for 30yrs this year. My rear-end has puckered a few times over the decades, but I stayed in and kept on buying.

I hope to retire sometime between the age of 55 and 59 1/2..which will be here for me not too far down the road.

Oh, and retiring doesnt always mean sitting on the front porch whittling sticks... for me, I plan on it meaning a mix of part time work which I control.

Dave

The NASA blue prints are great but ship with warp drive would be better. Anyone know of warp drive blue prints out there?

Just went thru a RIWF last week. Stock market never has done well when I had that happen. But with the market who knows, the demohols have been holding it up since 2008.

The markets do not care about the level of the DOW, not even a little.
Not to be ugly, but if you "sell in May and go away" you are not a investor. You just like to talk!
So tell me, over the next 10 years what are the 32 exact days the Equity markets will make 80% of their return.
You can't, nor can anyone else including me. If you are out of the market, which you will be if you "sell in May".
Only God knows the days and he ain't telling.
So you stay in, and buy when the pretenders are selling.
Money always, always ends up in the hands of the rightful owner.
You do NOT buy stocks to make money, you buy stocks to out pace inflation. The purchasing power of your money does not have a chance outside of the Capital markets to keep up with inflation.
If inflation was at a steady rate of 2.5% for 10 years, the dollar in your pocket today will only be worth .68 cents.
That's the only reason you put up with the volatility of Capital markets.