Anybody - How this going to be for next few months?

[drsteph]

Quote from jmoo:

There are three main components to price movement in the markets: Fundamentals, Sentiment and Technicals.

Fundamentally we are breaking down, INTC disappoints, AAPL, all the financials (Also the financials typically lead the market up or down)

The Sentiment is very weak I keep hearing recession and recently bear a lot.

Technically we broke the 50 and 200 ema on the weekly S&P as well as the long term uptrend.

My conclusion is the market is going lower sell rallies.

Normally, I would agree with you. However, it does feel like there is unprecedented financial engineering going on right now and as another writer noted, the fed is showing it is willing to pull out all the stops -presumably thinking that they can influence sentiment. Perhaps they can, and if so, more power to them. However, it probably just delays the inevitable, which to the current administration is just fine with them.

Equity markets will be valued lower in relative terms (when compared to commodities, hard assets, other currencies) but will probably not fall too much further in absolute terms. Not to say that they can't go lower, but there does seem to be a floor,at least temporarily.

 

[piezoe]

I going to revise my estimate below. I think 101-102 on USD/JPY is going to correspond close to 1150-1170 in the S&P. Therefore I think that this is where we will get to at least as an intermediate bottom and possibly the bottom.

Quote from piezoe:

No one knows the answer to your question, but my gut feeling is that after a bounce from the Fed move we will move still lower. I had a 1280 next target on the S&P and today we hit it. Note that there is very strong support in USD/JPY at 101-102 and we were in striking distance before todays whatever it was. I was expecting 101-102 in USD/JPY to correlate with about 1280 in the S&P but we got there without taking the USD down all the way. Note that that support is way back from Jan 2005 (see the weekly USD/JPY plot) I think the carry trade has been unwinding and that 101 USD/JPY level probably corresponds with an unwound carry trade. Of course we have to recognize that we are coming off the greatest real-estate-liquidity bubble of any of our lifetimes so it is entirely possble that we could break 1200 on the S&P before this is over. I guessing we will at any rate jerk around here for a little while at least and maybe see a continued bounce. So my only suggestion would be to keep an eye on USD/JPY.