If by chance the dow does rally back to new highs in the next month or so, will anyone here turn extremely bullish thinking that this was the minor correction the market needed to get back on track to 13000+
I think the problem is that a lot of people speak as if the equity markets lead the economy, when the reverse, long term is true. I can't be too bullish on equities unless I see real strength in the U.S. economy - and I'm not talking about strength in the low wage service sector job market. Also, I was real bullish back in June of 06, because of a bunch of high quality companies were showing up on my screens as really good values - low P/Es, low debt, nice cash flow- now, bubkus. There is literally nothing coming up other than troubled companies like homebuilders and lenders. And the ones that were coming up back in June of 06 have literally all doubled in share price in the last 7 months.
From the Stock Traders Almanac: "Since 1914 the Dow has gained 50% on average from its midterm election year low to its subsequent high in the following pre-election year." The smallest gains: 1946 - 14.5% (industrial contraction after ww2) 1978 - 20.9% (OPEC-Iran) 1930 - 23.4% (economic collapse) 1966 - 26.7% (Vietnam) 1990 - 34.0% (Persian Gulf War) 2006 low 10706 on June 14th.
According to Citigroup, when stocks have fallen 3 percent in one day, they've recovered handsomely within three months 80 percent of the time. If this is the case than why the breaking news segments every 42 seconds on cnbc.
'these facts make me laugh.....' Earlier in the year I thought I heard Cramer boyah for a 15k or 17k dow! Backs up the fact don't it?
he predicted a 17% rise for the DOW closing at 14500+ by the end of 2007. It now needs to move another 19% before the end of 2007. DOW is down 1.8% on the year.