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It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Henry Ford


Those who surrender freedom for security will not have, nor do they deserve, either one. Benjamin Franklin
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The idea that you know what is true is dangerous, for it keeps you imprisoned in the mind. It is when you do not know, that you are free to investigate. ~ Nisargadatta Maharaj


Thursday 27 January 2011

Another nice chart from ApartofNY,a regular contributor on the lounge (link above).Comments are Apart's too

 Should we break below the 55 Month Moving average the P3 is in play with a S&P forecast of 275-330.
Supporting this interpretation is a long-term valuation framework developed by Robert Shiller, a distinguished professor of economics at Yale University, known as the Shiller P/E. Based upon the 130-year data series supporting the Shiller P/E, stock market lows have historically coincided with a P/E multiple of 5-6x the trailing 10-year average real EPS for the S&P 500 index. A P/E multiple of 5-6x on today’s value for trailing 10-year average real EPS of $55/share – as calculated by Shiller – would imply an index price range of 275-330 for the S&P.  



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