The Significance of the Phisix 3,400

``Investing should be dull. It shouldn't be exciting. Investing should be more like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas.”- Nobel Economist Paul Samuelson

WHEN 3,400 was mentioned as a benchmark, the significance for this is the “concept of round numbers” as propounded by the legendary trader Jesse Livermore (Reminiscences of a Stock Operator), where he says that a round number crossed for the “first time” should likely keep the momentum going further.

In technical lingo, the Phisix has drifted above the 3,400 level from January 31^st to February 5^th in 1997 whereby its watershed level was reached at 3,447.6 on Feb 3, 1997. The other “high” was in January 4^th of 1994 at 3,308.37.

Figure 4: A Breakout of 3,400 Validates the Path to 10,000?

This means to say that it is NOT the first time for the Phisix to reach the 3,400 level. But should it reattempt to do so, it implies that a sustained breach of such threshold level SHOULD SPUR the Phisix to a much significantly higher level.

And MOST IMPORTANTLY, a sustained breakout connotes of the validity of the underlying PRIMARY STAGE of the Phisix bullmarket (nominally based and not inflation adjusted) which I think buttresses our assumption that the Phisix will conservatively reach 10,000 over the present cycle (barring a global depression) see figure 4.

In addition, in a WORLD OF DIMINISHING RETURNS, a Phisix at 3,400 relative to Friday’s close translates to 5.67% return, so absolute threshold levels basically sets your portfolio returns.