From a technical standpoint, our rally isn't just holding on. It still looks very healthy:
In fact, there's still a long way for the S&P 500 to correct without violating the trend channel it's traded within all year long.
As investors history is the only context we have for where stock prices should be. And while 2013's price action has certainly been impressive, it's also been far from unprecedented. Stocks may "feel" expensive, or too fast-moving, but on a historical basis, they're not.Does that mean that 25% annual rallies are the new normal? Of course not. But the options aren't limited to massive rally or massive crash either. The last time the S&P broke above the 20% mark in a single year, investors took home 12.78% returns in the year that followed. The time before, we got 8.99% in the follow-up year. That makes a pretty good case for a strong showing in 2014. For the reasons I've talked about in the past, I think we're likely to see more sidelined retail money come online in the months ahead. This is still very much a "buy the dips" market. And so, as long as the uptrend in the S&P chart remains intact, it makes sense to continue doing just that. -- Written by Jonas Elmerraji in Baltimore.
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