Against the Herd

It was nearly  here in 2000, then again in 2007; the S&P 500 index is once again at a record closing level of 1,565.  The next milestone level for it to break will be the intraday high of 1,576 also achieved in 2007.

What’s interesting about this level?  We have now bounced off of it twice and the market hopes that the third time is the charm.  In fairness, one could argue that the nominal level in the year 2000 is substantially higher than the same nominal level today given inflation; however, let’s just celebrate nominal milestones and forget inflation adjustment :-).

The chart above shows the painfully rocky journey that the S&P 500, a good proxy for the US stock market as a whole, has taken over the past 20 years.  More importantly than crossing the red line below on the positive side is whether or not this is the last time we’ll see these levels or if history will repeat itself for a third time.