Dont worry about the decline, a 40% upward move coming!!!

Discussion in 'Trading' started by S2007S, May 6, 2012.

  1. S2007S


    Dont worry about Fridays close or tonight's futures, this article says there is a 40% upward move coming in stocks in 2012, so sit back and have no worries about any decline in equities, just keep buying all the dips below 13,000 and wait for the 40% risk free money making return on your money!

    40 Percent Upward Move in Stocks Coming?
    Published: Friday, 4 May 2012 | 7:01 AM ET
    Text Size
    By: Lisa Auret, Assistant Producer, CNBC

    Stocks could see a move higher similar to gains seen in 2003 and 2009, leading to a rise of as much as 40 percent in 2012, Michael Gayed, chief investment strategist at Pension Partners, told CNBC's "European Closing Bell".

    Gayed conceded he is "probably among the most bullish of strategists." And his prediction is highly unlikely to come true if some of the more dire predictions about the U.S. economy come true. But he sticks to his assertion that a big jump higher could be on the way.

    Gayed pointed out that indices like the Nasdaq [.NCOMP 2956.34 -67.96 (-2.25%) ], S&P 500 [.SPX 1369.10 -22.47 (-1.61%) ]and DAX [.GDAXI 6561.47 -132.97 (-1.99%) ] are still holding at high levels, despite major concerns over Spain's ability to fund its debts and believes that trend can persist.

    "2011 was essentially entirely about a deflation scare caused by Greece. Here we are with Spain still being a problem, and yet the Nasdaq in the U.S. is over 3,000.The S&P is at 1,400. The DAX in Germany is at 6,700. You’ve seen tremendous resilience in the face of more negative news," he said.

    "If the negative narrative is on its way out, if positive news is about to kick in, and equities are already elevated, then the retail public could easily push stocks to new highs," Gayed believes.

    "I’ve been making the case that you could see a 2003 and 2009-like move in equities," he said, "whereby it’s possible that you get something in the order of 40 percent in the broader stock market," he said.

    His reasoning for that relates to the reflation trade. Reflation refers to central banks and governments stimulating the economy by increasing the money supply or by reducing taxes - the opposite of deflation.

    "What happens when you come off a deflation [cnbc explains] scare is you tend to have very big moves historically in risk assets,” Gayed said. “2011 was essentially entirely about a deflation scare caused by Greece.”

    Gayed believes there will be a re-allocation out of bonds and into stocks, calling it “The Spring Switch.”

    “There’s this paradox I think that’s happening here, whereby if you are bearish on equities at these levels, you are then automatically assuming that bond yields will drop further. Yet they are already – in Germany and the U.S. – at panic low levels,” he said.

    Yields at such low levels make bonds incredibly unattractive, Gayed pointed out.

    “It’s kind of this strange situation, if you’re betting on a correction, bond yields drop lower. But that makes stocks on a relative basis even more attractive,” he said.

    Gayed is long U.S. equities. But he expects the next move higher in equities to be led by emerging markets as they employ easing methods to push their currency values down in order to counter softening demand from Europe.
    © 2012
  2. From what I remember of the past year every down day on news from Europe, most of them due to Greece, was undone either same day of next day.
  3. TILT2


    You trade according to CNBC? No wonder you fall in the 90% of the traders that are losers!