Quote from Spectre2007:
longterm trendline
there needs to be a bull here.
why don't you rechart that indexed to inflation, US dollar strength, and PEG rates.
Its a useless chart, because you'd clearly see the markets have gone nowhere for nearly a century, and only recently (last 4 yrs or so) earnings growth is at historic all time highs, pushed on by forces of globalization. The markets produce 4 times or so the earnings they did in 2000, and are priced LESS than before. The distaste for stocks still permeates equity markets (which explains this bearishness), and do you honestly think it'll continue, considering how housing prices will not perform in the next few years? Where will the cash go ...
Of course a correction to 1325-1350 is all over the charts, but are fundamentals worth anything here? Factor in dollar weakness, earnings growth (which is AMAZING compared to history), relatively low PEs, etc. and this is nothing but a buying opportunity.
shorts here having an orgyfest over 30-40 pts on the ES are kidding themselves if they'll get anymore. Trendlines to 1000? dumb amateur analysis.
remember, liquidity is still enormous and will remain, especially if the fed saw recession signal ... like I said before, $80-100 oil and massive job losses are the short term exit signal, since the consumer (which is extremely strong) will hurt in the short term.
This is purely technical and anyone who's talking recession here is clearly watching too much CNBC.
By the way, this 'correction' is occuring too quickly to stick. If it is a liquidation, just as everyone is purporting (and I am too), in connection with JPY carry trade, I'm absolutely convinced these markets are going to the moon after the fear is pressed out. Why? Look at oil. Same thing: technical liquidation and retest PAST old technical levels. Fundamentals drive us to or away the near term moving averages, and fundies are solid on oil, giving support. Same holds true with the cheap equities, which will move us above the MAs. It took ES 60 days to sell off 100 pts last correction, on much more substantial inflation fears (pressed on by worries screaming oil would kill earnings growth, and more importantly FOMC rate change direction adjustment / Bernanke fear). Since it wasn't an unwinding, it took longer to recover. Peak to recovery was 4-5 months last correction.
For this reason, I am suggesting the same funds that are driving this down are going to drive it up JUST AS QUICKLY. My bold call: we test 1350-1360 by Monday or tuesday (since I do agree Friday was technically week), and are back up to 1440-1460 by April 1. More importantly, we're back up to 1410-1420 by middle the following week.
remember, besides a few losers on JPY, there will be very little liquidity shrinkage from this selloff. This cash will have to go somewhere. And since it sounds like everyone wise here is sitting on cash, you know what that means.
S&P at 1600 by end of year. I'm not joking. Subprime is already hurting prime stocks, so its being priced in. Even recession is being priced into a correction. What happens when its not as bad as people expect? Look at homebuilders end of year (which was a premature rally; I was short the wrong side) 2006 for an example.
