It is clear from this chart that the recent rally has only been correcting a statistically extreme condition and only this week has the SPX moved inside the 5 year 2 STDEV BB's. One can see from the monthly chart I posted earlier that this condition only occurs a few times in a century. I still feel we will se a retest of the lower % year BB, that could happen at any time but it is more likely it will happen at some point after the SPX penetrates the 1000 level. This is still in the long term undervaluation zone and I suggest that the retest will be successful and followed by a rally to the 5 year price average, roughly 1250. At that point I will open a good bottle of Bordeaux and ruminate on what comes next.
Click to enlarge (1600 px wide)