The editors asked me to throw together a brief look at how we're going to fare in 2005. Well, here's one for you: How about we reach the all-time highs by Dec. 31, 2005?
Sounds far-fetched? Pollyannaville? Maybe, but a simple chart of the Standard & Poor's Depositary Receipts (SPY) tells a very bullish story.
For ease of use, I employed an arithmetic chart rather than a log chart. With an arithmetic chart, the difference between the numbers on the X axis is the same number. With a log chart, it's the same percentage. Log charts are useful when you're trying to compare two different stocks. But when you're trying to figure out how far a stock might run, an arithmetic chart is best.
Before I get to the chart, though, it's helpful to understand the basic premise of "measure moves." Simply, that premise is that stocks (or indices) tend to move up a set amount, pause, and then, once they break out from the pause, move up by a similar set amount.