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Knock, knock, knocking on all-time highs…

The S&P 500 index is within a whisker of making new all-time highs. ‘What?’ I hear you say, ‘The all-time high is at 4,818 and we are near 4,643, that is a bit more than a whisker!’

What about dividends though? The chart below is the S&P 500 Total Return index (monthly semi-log), also compiled by the good folk at S&P, which includes dividends (the popular S&P 500 price index, does not). The all-time high in the total return index was set near 10,050 in early 2022. We are at 10,047 now. That is a whisker!

Does this matter? Yes. While media pundits and analysts talk about the price index, investors who have exposure to the main US index will usually be collecting dividends. This includes distributing and accumulating funds, ETFs etc. (but not those financial products that exclude dividends). Sentiment is key, and odds are that investors will have noted that they have done well in 2023 and may be about to be in ‘uncharted territory’ as far as sentiment is concerned. The chart below is the weekly arithmetic chart. A simple measuring objective on a sustained break to new highs would be near 12,500 – it may take a while, but it is worth keeping in mind. Double top risk? Of course! Any knock backs would ideally hold above 9,443 to keep the 8,885 October 2023 low out of play. Key weeks ahead!  

Gerry Celaya, Chief Strategist

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