Kansas City Chiefs vs. Houston Texans, Seattle Seahawks vs. Minnesota Vikings, Green Packers vs. Washington Redskins, and Pittsburgh Steelers vs. Cincinnati Bengals. Huge playoff games, big money involved. But the biggest game of all this January will be the S&P 500 Index vs. the Headwinds.
Betting is heavy on both sides . . .
On the S&P offense, players include Microsoft Corp. (MSFT), Facebook, Inc. (FB), Amazon.com Inc. (AMZN), and Alphabet Inc. (GOOGL). The defensive playersai??i?? line-up includes General Electric Co. (GE), Johnson & Johnson (JNJ), Wells Fargo & Co. (WFC), and AT&T Inc. (T).
The Headwinds starting line-up is brutal: On the offense, we have Strong US Dollar, Falling Oil Prices (nicknamed ai???Glutai???), Sluggish Global Growth, and Shrinking Corporate Profits. Defensive players are Middle East Turmoil and European Refugee Crises.
In 2015, the vaunted S&P 500 team had the worst year since 2008. Although the offense showed strength and agility, and scored several impressive touchdowns– Netflix (NFLX) rushed for 134% and Amazon grabbed 118%, the team still lost 0.7% on the year, ending its prior winning streak of three years (2012, 2013, 2014) of double digit gains.
A group of the S&Pai??i??s strongest players were sidelined with severe injuries including Exxon Mobil (XOM) and Chevron corp (CVX). Two other favorites, Apple Inc. (AAPL) and Walt Disney Co. (DIS) started 2015 in the spotlight , but were also sidelined in the last quarterai??i??leaving the squad with a limited number of good players.
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Still, resilient S&P 500 fans, known as ai???bulls,ai??? insist that the year ahead could be a profitable one. ai???Hey,ai??? they say, grinning and giving us a thumbs-up, ai???Just check out the stats.ai???
So we did. Turns out that only four times in its history, the benchmark index closed a year by 1-percent or less. The bulls point out that when that happened . . . in all years but one (1947) . . . the S&P 500 went on to a winning year, reclaiming double-digit gains.
In fact, if we look at the playing field below, we can see the most recent example. The year 2011 ended flat (opened 1257.62, closed 1257.60), then roared up 13% in 2012.
Chart Courtesy RealTickAi??
The S&P 500 closed 2015 at 2043.94. It opened 2016 at 2038.20. To be sure, as we move into January, it will have more pressure thrown at it, not only by the Headwinds, but by way of 4th quarter earnings announcements.
Technically speaking, the Index needs to hold its current position on the field, and remain in front of (above) the 1870 support level. Should the Headwinds push it below that support line, it could get penalized another 270 yards (points) to the 1600 level.
The bullish fans insist, however, that the S&P 500 can recapture its goal line won in 2015, at the 2134.72 line. Whatai??i??s more, the bulls declare, team S&P will take even more goals in 2016, and flatten the Headwinds as never before.
We hope the bulls are right, ai???cause itai??i??s a lot more fun to attend these January games when the S&P Index dominates the field.
Keep green on your screen,
Toni Turner is the President of TrendStar Group, LLC, is an accomplished technical analyst as well as a popular educator and sought-after speaker in the financial arena.
She is also the author of best-selling books: A Beginnerai??i??s Guide to Short-Term Trading, Short-Term Trading in the New Stock Market and Invest to Win: Earn and Keep Profits Bull and Bear Markets With the GainsMaster Approach, co-authored with Gordon Scott, CMT.