S&P500 dropping to 600 by spring 07

[nla]

Only 786.72 points to go to S&P 600.

[(former)FormerSanDiegan]

I stand corrected … but I’m not holding my breath.

[sdduuuude]

Some investing advice – taken from one of the links on the home page.

” ‘Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent.’ These are Keynes’ words, and illogic does often reign, despite what the academics would have us believe. ”

Seems appropriate for this thread.

[(former)FormerSanDiegan]

Monthly Market Update:

As of Jan 5 2007 S&P 500 is at 1409. We need a greater than 50% drop in about 3 months to hit 700 by Spring.

That’s only about 10 points per trading day. It could happen, right ?

[TheBreeze]

Sure it could happen … and monkeys could fly out of my butt. The S&P 500 PE is only around 15 or 16. I realize that many people here think that the entire worldwide economy is built upon the Southern California housing bubble, but I just don’t see it. Not everyone is using their house as an ATM. Some of us still draw a salary that stems from helping to make useful products.

I think the Iraq war is more likely to lead to a recession than the popping of the housing bubble. I read somewhere that the total cost of that debacle was around $2.6 trillion already (including several hundred billion in direct costs and the costs of taking care of the permanently maimed). Luckily, the Democrats are in charge of Congress now and can provide President Bush with some much needed adult supervision. If our economy can survive the next two years with that idiot in charge, our economy can survive anything.

[Anonymous]

Here’s the link that I use for the S&P 500 P/E; it’s 18:

http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_500/2,3,2,2,0,0,0,0,0,5,11,0,0,0,0,0.html

The war on Iraq is a minor drag on the economy, and a more important damper on sentiment. The way the President is having our troops fight (gloves on) is frustrating. I’m keeping my fingers crossed that next week’s strategy announcement by him lays out a clear path to victory and exit.

But, President Bush is by no means an idiot. Lots of mistakes, yes (nominating Miers for Supreme Court). Poor judgement on important issues, yes (proposing and signing Medicare/Welfare Part D).

The Democrats are going to have a fun time, now that they’re in the driver’s seat. I look forward to pleasant surprises from them (because I have low expectations for them).

[TheBreeze]

I’m keeping my fingers crossed that next week’s strategy announcement by him lays out a clear path to victory and exit.

You are keeping your fingers crossed for a winning strategy announcement from a dude who’s only military experience involves getting high and patrolling the Gulf Coast during the Vietnam War? Good luck with that.

Victory in Iraq is not possible. The Sunnis and Shias are only interested in killing each other and care not one whit about democracy. We went into Iraq under the President’s false pretenses and now we need to get out as soon as possible.

[Chris Scoreboard Johnston]

Chris Johnston

It looks to me like the January seasonal tendency for a decline that has developed in the last 5 to 7 years is taking place. I am shooting for approx end of Feb to establish long positions, for what should be a good up move. This date is a guess right now, just based on a loose projection indicator I have that is generally right, but not precise. It will be more important to watch what develops in the decline, to determine when and if a buy spot is setting up. It has been a very long time since we have had a 10% or more decline, one of the longest times in history. As a result, this year could have some big swings in both directions.

There are certain market internals that have to hold up properly during this decline, for me to be aggressive on the long side. If these do not hold up, I will not buy the dip. Primary among these internals, is the 30 yr bond rates need to resume their uptrend in price, downtrend in rates, that has been in place since July. I will be more than willing to go on the record in here at the time I initiate this position, if anyone is interested. Then I can either be hammered or congratulated as to the accuracy of it later on.

The tone in here seems to have gotten better since I have been out of here, so hopefully we have a constructive environment for exchange again. I did read through that nasty stuff regarding our leader Rich, and hope that has resulted in people being a little more kind to each other. There is no place for something like that in my opinion. He created this forum for everyone who is here, and he is a top notch human being.

I hope everyone had an enjoyable holiday season.

[SD Realtor]

Good to see you back Chris.

SD Realtor

[(former)FormerSanDiegan]

TheBreeze –

I have to agree with your monkey comment. That’s why I periodically post a market update on this thread. Although I anticipate some pullback/correction in stocks (Thanks Chris for providing some more insight from a traders’ perspective) the original notion of predicting a 50% drop in S&P 500 because of a 50% drop in a housing index solely based on the fact that they are correlated is both naive and mathematically incorrect. Simply because things are correlated, does not mean that there is a 1:1 translation of one factor to another.
If life were only that simple.

[qcomer]

Chris,

Just last January, markets started off 2006 with a nuce bang (close to 5% boost in first month) but that was following up a slow December 2005. You are probably right in stating that following a reasonable December return, yeah January hasn’t been too kind to markets.

You talked about going long in Feb. Do you have any short positions or positions you have taken partial profits, considering that market is stuck in ranges for about a month now? I think market will be stuck till end of January in ranges and will then follow a sharp up or down movement. I am also looking for signals right now. There are some signals about end of commodities movement.

[Chris Scoreboard Johnston]

Chris Johnston

qcomer – ironically I got long the S&P futures on this am’s down opening, but will exit on tomorrows opening. My entry was 1415.25 so it is about 8 points profit on a very short term trade. My short term trading system generates signals in both directions regardless of long term trends. The above comments were more geared towards a longer time horizon of about 6 months.

I have no short positions in any stocks right now. My stock money is 100% in cash in t-bills and has been for about 30 days. The seasonal tendencies tend to have periods where they shift. Generally, January has not been a time for drops, but this has changed in the last 7 yrs or so.

I am concerned about the bond market holding up to support a buy signal in 30 to 60 days. Also, the commercials are heavily short right now. I am hoping for a sharp decline which may not happen, accompanied by a rally in bonds and a shift by the commercials to the long side, before I plow heavily back in on the long side.

If this decline does happen, I will have to see how a few other internal things look at the time to see if it is still a buying opportunity, or the beginning of a larger drop. There are cycles due on both sides this year, so we should have some volatility in both directions.

I will state it out in the open forum here if and when I go in, and then we can watch my celebration or demise, LOL!

[(former)FormerSanDiegan]

Only 48 trading days ’til Spring.

[davelj]

This stock market is operating on a set of fundamentals that I’m just not seeing. I think we’ll officially be in a recession by the second half of the year and this market’s going to start really f(l)ailing.

[(former)FormerSanDiegan]

This stock market is operating on a set of fundamentals that I’m just not seeing.

Do you see double-digit earnings growth as part of the fundamentals or do you just not look for it ?

[Author]

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