PS – I agree that stocks suffer in recessions, that is not my point.

Your original post stated
This chart predicts the S&P500 will keep falling and hit 600 by summer 07.

I have a problem with interpeting this graph to mean that when the HMI decreases by xx% (currently 50%) the stock market declines by xx %. Making a quantitative argument for S&P 500 dropping to 600, based on the false premise that the HMI index predicts stock market values 12-months hence is dangerous.

Now as for predicting a recession and a significant decline in stocks based on weakness in housing. I can agree with that general statement.

Once again, it’s the quantitative part that bothers me.

Good luck on your endeavor. Look forward to seeing the occasional thought provoking posts, even if they are more infrequent.