Posted on 05/26/2010 8:09:27 AM PDT by blam
David Rosenberg: The S&P Is Going To 850, And There Are 10 Leading Indicators That Are Rolling Over Right Now
Vince Veneziani and Joe Weisenthal
May 26, 2010, 10:56 AMA
From this morning's Breakfast With Dave note, Rosenberg presents the basic argument that what goes up big will come down big:
There have only been two other times when the stock market ran parabolically up from a low in barely over a year, as was the case this time around (+80% from March 2009 to April 2010): the 112% surge from June 1, 1932 to September 7, 1932; and the 116% runup from March 2, 1933 to July 18, 1933. In the first case, we had a 40% correction and in the second, the correction was 34%. So, we are talking here about the prospect of a pretty hefty reversal in the S&P 500 that could very easily take the index down to as low as 850, if the history of these types of givebacks is any indication.
The problem for Mr. Market is that it went into this latest Europe-induced ordeal with an excessively bullish GDP growth outlook for the U.S.A. – at the April highs, we would argue that a GDP growth rate of 6% was effectively being discounted. How nutty is that?
So, where next?
In the aftermath of the correction, the equity market is now pricing in a growth rate closer to 3.5% — the fact that earnings have been rising while the market has been correcting has helped cut the degree of overvaluation in half, to a 0.5 standard deviation from 1.0 just over a month ago on a Shiller normalized P/E ratio basis. But the ECRI leading economic index is actually foreshadowing a deceleration in real GDP growth, to 1.5% ...
[snip]
(Excerpt) Read more at businessinsider.com ...
Well, just goes to show... markets go up and markets go down... then they go up... then they go down... rinse and repeat...
It is at 12.70 now so it will lose a 3rd?
Didn’t you get the word? The recession is over. Happy days are here again.
good time to buy the SH ETF.
I’ve been watching markets for a while now. can’t remember ever seeing the volatility and momentum changes like we see today. The little boy on the side of the curb, watching the king’s parade, might utter, when not commenting on the absence of His Majesty’s clothing, that, perhaps, the market is being manipulated by the political class to save their political *ss!
dont worry, Obammie is on it. just this week he commanded that the gulf oil leak be plugged.
>> Well, just goes to show... markets go up and markets go down... then they go up... then they go down... rinse and repeat...
I know; I’ve seen the charts.
The funny thing is, I’ve only seen those charts for the past. NEVER the future.
Is there a website where I can subscribe to the charts for, say, next month? I’m sure SOMEONE sells them. When I find out where to get them I’m gonna be RICH!!!
No, the S&P 500 at the moment is 1086, up 12 on the day. So the authors are calling for a decline of about 22%.
I share their general bearishness, but I don't have a specific number in mind.
And they will only cost you a handfull of beans
ack
life on the democrat plantation.
/s
I’m invested in fertile land, guns and ammo, and gold.
See you on the other side.
did this really happen? Source? I know the stock market ticker I used “stopped” at 9:46 for about 15 minutes.
I am wondering if this is an ecconomic attack by outside sources.
“The Stock market no longer has any connection to reality.”
Oh G0!
that’s encouraging........
But I do have my fertile land and “personal property protection tools”.
“can’t remember ever seeing the volatility and momentum changes like we see today.”
I can. Fall and winter of 2008-2009.
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