It will come in 2.5 months. The Wilshire 5000 will be at 16150 and it will be a selloff to 14535 or the 65 week moving average at that period in time. Oil will be around $80 per barrel. The correction will probably be initiated by the June 27th meeting when the Fed will increase rates due to inflation. When oil exceeds $70 per barrel then there will be a return to the old junky small cap drilling stocks that made a big hit in 2006. Some will probably double or triple in short time. The correction will not be the end to the bull market, but investors will view it as another time to buy the dips. The market will rally to 16958 by the year end after the correction is over. It will be 13% higher then where it sits today. By the end of the year, the spirit will be very bullish and at that time we should re-examine if the bull market can continue. The end of the bull market will be marked with oil reaching the target price of $130 per barrel and interest rates spiking up to new highs as the Fed continues its firming to guard against inflation (which will be an oil induced inflation). As oil goes higher, the profits of companies will be cut into. In between now and next correction, you should take full advantage and buy stocks only moving up with the market. Stocks like RACK will be left behind while the McDonalds of the world will be bought and sold higher. Basically stocks that move higher will have some type of international influence. There will be a recession in the United States sometime in 2008. However, the recession will not be what causes the market to go down. The question of growth in the foreign markets will be what makes the market go down. Interest rates and oil will steadily move higher in this next leg. Watch the ISEE options sentiment. During the next 2.5 months, the ten day moving average will sail up to 140 and hang there. Then the average will start moving down and a cautionary signal will be raised when the average hovers in the 120s.
Watch rates for sure...that will be the key to the correction... High oil certainly doesn't seem to scare the Fed...they view it as a tax. And conveniently they look at CPI numbers ex food and energy. Cuz I mean come on, how many people do you know that eat and/or drive cars?
watch usd/jpy for hints......after 2/27 it has an interesting correlation. pull up an intraday chart for spx and usd/jpy on that day and see what you see. some divergence now. just my 3 cents
I agree with a 1/4 rate hike too but think it happens later in the year. First China, then us. I'm still a bear but the Dow will touch 13k to make everyone happy by the end of the week and the media can pump that. It cracks me up that people think rates will drop..wtf? keep dreaming. Sell in May go away and June Swoon won't apply this year and next 2 months trade sideways. No summer rally. There will be a major geo-political event that will crack the markets when you least expect gapping the DOW 3-4% when you wake up. Won't cause too much panic and people will pick up on the dip. They will get burned from that point on as the market will decline 14/15 days just like it did to the upside this month. (I expect Iran-Israel tension) October 17th 2007 Black Friday. Santa Clause rally to end the year.
fed is going to raise rates before cutting them. Expect a raise sometime at the end of 2007. Rates will remain at 5.25%
I would not be a bear in this market *right now*. This time period is comparable to August or September of last year. If you stay on the sidelines, then you wont be able to get any action. I would buy stocks that are traveling above their 20 or 50 week averages where the charts look clean. I think the doubles and triples are done for now until the 3rd or 4th quarter. The stocks in the first two quarters that performed will be the laggards in the last two quarters. The industries performing right now are mid-cap growth, energy, health care, materials and utilities. The industries that are not performing are financials, info tec.
2.5 months is the correction time huh? Man, do you guys play on the computure at work when the boss isn't looking? What calls for a correction? Oil near the 80s? Based on what? What the hell has ET gone to...more crap than ever before. Baseless crap, not backed by any substance or logic. Watch the F()*& Fed Funds rate idiots. That will tell you where the Feds may go. OIL, Weather, Spiderman, All that other crap is pointless. When is the last time you saw the Feds make a move other than what the FED FUTURES pointed to? Umm One time, when the cut rates in a surprise rate cut, back in 2000-2001. Morons!:eek: