That is a 100% in the S&P since it’s March 2009 low of 666 (see David Fry’s chart). Does it matter? Can we expect even a LITTLE pullback after a 100% run or is it "to the moon Alice" and maybe Mars and Jupiter while we’re at it as the Federal Reserve’s multi-Trillion Dollar thrusters send us to the stars, breaking the bonds of gravity (and logic) as they send stocks every higher in an expanding universe of freshly supplied money. As fellow stock market physicist, Art Cashin said yesterday:
The Newtonian Rally Continues – A mild paraphrase of one Sir Isaac Newton’s laws of force and motion (inertia) says that a body in motion will stay in motion unless acted upon by some counterforce. That seems to be the guiding rule for the QE2 rally since it started with the Jackson Hole speech before Labor Day.
Yesterday, the Dow rallied for the sixth straight day. Simultaneously, treasuries fell for the sixth straight day. It was a low volume levitation, however. The NYSE volume failed to make it to 900 million shares.
Does the low volume indicate we are losing thrust or was it merely a function of the end of the Fed’s current POMO schedule forcing us to coast on momentum for a day as they prepare to fire stage three thrusters to help the S&P achieve final escape velocity? As I said to Members yesterday:
The Fed can feed $3.5Tn into the thrusters and you can have a spectacular launch that looks like it’s heading straight to the moon but it’s right at the peak, when you need to fire that second stage perfectly, that you have the highest probability of failure. When a market escapes gravity – you will know it. Like the Nasdaq in 1999 and oil in 2008 – not just a little up every day but spectacular gains that go unpunished. That’s what we’ll see if they hyperinflation begins to creep into the markets.
As I had pointed out years ago in our educational post on "Stock Market Physics":
What we have in this chart, along the dotted line, is an actual picture