I don't make arbitrary projections. Except for this one. Sell your stocks and go short. But them back cheaper later. Financials, REITS, chain department stores (exception of electronic stores and Wal-Mart and Target) and restaurants, construction material fabricators and suppliers, auto companies, RV/Boat makers, and oil services (yes, oil services) will fare worst. Solar stocks will get slaughtered. They will be the short of the year.
http://online.wsj.com/article/SB120363174262884069.html?mod=hps_us_whats_news I agree something big is brewing, at least 1000 points on the dow, still not clear to me though if it is going to be to the upside or downside. Possible tell is that whereas EM proxies such as EEM and FXI have been relative safe havens they are now starting to trade down with the US indicies and the VIX finally started to move. Tomorrow may confirm the triangle break or maybe we will have to wait until next week, in my experience though when a triangle is going to break to the upside it breaks early when price stays in the triangle until the tip like this one it usually breaks to the downside. Not backtested just years of watching price action speaking. Also $ weakness usually puts a bid under stocks but not today.
Mvic, watch for at least a 40% crash in Chinese equities in the next 4 to 6 months, too. The bad data and fudged accounting numbers have only begun to take center stage.
ByLo, just curious. Is that 'only' your prediction or are you positioned accordingly. If so, are you outright net short the common stocks/ETFs or long puts?
Bylo I totally agree this market is ready to test fresh new lows, but me being as bearish as I am its tough to agree with the 10,400 call. I think there will be another drop, another drop that will certainly take out the intra day Jan 22nd market low. I would be getting bullish around 11250-11500 and EXTREMELY bullish under 10750.
the only thing I agree with is your solar stock short because of the over capacity. There is to much liquidity sitting on the side if you take a look at the money people have withdrawn from US-fonds its at a pace now that usually marks bottoms give or take a little. Also check the sentiment, good for a bottom, too. Then just take the time and look at the S&P not at a dollar chart but at a Euro chart or yen chart and you see that some stocks are now bargains for investors outside USA and they will put a floor under the US stock market. We will see a inflation rally in US-Stocks. Only thing to get slaughtered is the 30year ZB. I am from Germany and have avoided US-Stocks since several years but now I fully focus on US stocks and I am convinced US stocks will outperform nearly all other stock markets for the next 2 years. I know I am in a minority with this opinion.
Hope you are right, my core position is EEM puts. As we have struggled higher off the Jan lows volume has been steadily dropping off suggesting that perhaps there isn't much upsdie left here and we are close to a turning point. On the other side of the coin there seems to be a number of tech stocks getting DeMark TD sequential buy signals on the daily chart (from minyanville). What concerns me is that with all the bad news and the bad inflation news in oparticular both in the US and also Wed numbers in Europe we haven't seem much downside action. The auction fails, the widening of the corporate spreads, stagflation worries, monoline consequences, people basically unable to get their cash in a lot of intruments they thought were cash equivalents, and yet here we still are putting in hh and hls. Yes rallies are being sold but there are bids coming in at increasingly higher levels.
I've been watching the wire all day and see bad news folllow bad news, Lehman forcasting increase in unemployment, Fisher affirming that inflation is a problem, and Fed will be restricted in rate cuts, ross saying rate cuts aren't helping, tons of CDO tranches getting downgraded, UBS throwing out its CDO valuation model, rating agencies starting to look at share buybacks as a potential for downgrades(cash/debt ratio), credit card sector weakening, higher costs of auction failures going to be reflected in charges to earnings ala Baxter yet the market is not selling off in any meaninful way. Is the effect of all this and the impact it will have on earnings really all priced in?