The Heisenberg Indicator remains seldom mentioned yet seldom wrong. In the early summer of 2013 with stocks mired in a slump and increasing chatter about the Federal Reserve tapering asset purchases, the HI pointed to a 1850 S&P level before the end of the year. We know what happened next, but who else was calling for those types of gains into the end of the year? No one.
According to the HI we are headed for — drumroll please — more gains and S&P 1850.
While the FED is looking to taper its injections of liquidity into the market, according to the HI, it won’t stop investors from taking it higher.
When 2014 hit and the new year started the HI said we would succumb to a pull back. We had a nasty pull back indeed, with stocks reeling and the pro's calling for continued weakness. That weakness was short lived and here we sit at record levels. The HI projections will be out shortly for the next 6 months, the most recent HI readings are contained in the chart below. We just hit record HI levels, and this would correlate perfectly with the recent action in the stock market.
If you are unfamiliar with the HI, a positive reading denotes a buy signal with the magnitude of that buy signal representing the price placed on that buy signal. It has correlated almost perfectly with stocks from the lows in March of 2009 and after five years still offers a tremendous glimpse into future price actions.
We will be releasing the next HI projections shortly. Stay tuned.