Market Could Rally 40% This Year as Money Migrates From Bonds By Matt Nesto | Breakout â 2 hours 38 minutes ago It seems the old adage, ''be careful what you wish for" might be timely advice for the stock market right now, since the best first quarter since 1998 - with nary a dip to buy - and a 30% pop in 6 months, has left many a money manager begging for a sell off. However, Ed Dempsey, founder and chief investment officer of Pension Partners, is not one of them. In fact, he thinks the climate is right for this mini-bull to tack on another 30% this year. "Everyone is still betting on the pullback which is the reason you're not getting it," he says in the attached video. "In a period of reflation where you have lots of liquidity, lots of credit being extended, you can have these very explosive moves and they catch people off guard." That's right, folks. The great "Spring Switch" is underway, a period in which Dempsey thinks the rotation of money from ''perceived riskless assets" like Treasuries, into reflating and growing assets, like stocks, will carry this market to new heights. By my math, north of 1800 on the S&P 500 is where we'll be after a 40% yearly gain. "The Fed has made riskless assets incredibly risky," he says, explaining that "what the Fed is trying to do is to ignite a fire under risk assets by making it incredibly painful to hold these perceived risk-free assets." If you don't believe it, he says all you have to do is look back and listen to what Ben Bernanke says and does when there's been any meaningful reluctance in the stock market. And so, fully convinced that Bernanke has got his back, Dempsey's playbook is actually quite simple. Own ''equities in general" and financials in particular he says, adding that the next beneficiary of the reflationary rotation will be the Emerging markets (EEM), which he predicts are poised to ''really catch fire'' in the next few months. http://finance.yahoo.com/blogs/brea...BzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3
hmm ... I agree a bond correction is coming, which will spike other assets. But S&P 1800? I don't think so. Stocks will become overvalued, people will want out of the markets long before 1800. With bond money rushing out, commodities will catch bids, faring well for the market short term. But the commodities will then tax the consumer, dragging the economy. Can the market reach 1500? Yes. The blast beyond 1400, the oversold condition that arises, that will be the multiyear top. It will be a technical surge, and nothing more. Shorts covering, bonds pulling in, money rotating, managers chasing. The next news event will bring a sharp pullback. The rise above 1400 will be technical and frothy. Smart money is already in. Buyers are now chasers, short covering and mutual fund contributions. 1800 would imply we are at the tail end of a bull market. But, there is no bull market right now. So, if the Fed pulls the floor from the bond market? We get a QUICK sell-off out of bonds and inflated risk assets. Smart money takes profits from this move. This is what NEEDS to happen for people to LOSE money in a market that is not enthusiastic about buying. People are hedged and continuously fearing major corrections. To screw the masses, the market needs to produce this wild, unsustainable move. Blow out the hedges, gain confidence, thinks look good, and THWACK. Supply and Demand. But damn, what if things ARE good. What if jobs come back? Companies are leaner and meaner. We will easily break 07 highs with a significantly improving job market.
The chart / mood feels very similar to late 2010 when all bears fought the tape with passion, and got obliterated by The Bernanke.