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My Stock Market View for the Rest of 2011
Down, then up, then down again. How about that? I believe that the global risk markets will bottom sooner than people think, and that the time has come to compile a shopping list of investments to pick up on distressed days in the market.
I think that at the most extreme, the S&P 500 will bottom at 1,000. At this level, the index will be showing a 28% decline from the April 29 peak. The market multiple will have collapsed from 14 to 10 times earnings. That is against a 30 year range of 10-22. In other words, we will have discounted a full scale recession. Ten year Treasury bond yields are telling us the same with a 1.90% yield, against a 3.6% inflation rate.
The likelihood is that this recession is not going to happen. Virtually all the current economic data is consistent with the forecast I have maintained all year of 2%. Car sales show that the industry is recovering. Major exporters like Caterpillar and Freeport McMoran show the demand from emerging markets is booming. An enormous reconstruction package in Japan is just starting to kick in. Add all this together, there will be enough demand to assure 2% growth for the full year, which would represent a modest improvement from the first half.
Mind you, I am not proclaiming the birth of an entire new bull market. I believe that we put in the top for stock prices for this economic cycle on April 29 at 1,384, and it is unlikely that we see that print again. My best case scenario will be for a recovery of the 200 day moving average at 1,285. If we start this move off of a 1,000 bottom then there is room for a 28% move, certainly something worth taking a bite of.
What will be the drivers of such a move? In September, we will start releasing Q3 corporate earnings, which are likely to be buoyant. We will also start to see the traditional yearend liquidity push. Europe will hopefully go quite again, once the leadership returns from summer vacation. The icing on the cake would be any surprises from the Federal Reserve on the monetary front at their September 20-21 meeting, as they did last year. All of this will pave the way a rise in risk assets everywhere that could last three to four months.
That gets us into 2012, when the real challenges reassert themselves. Very little about the presidential election is likely to be equity friendly. Arrest Ben Bernanke for treason? Really? Where’s the rally in that? Gale force headwinds on the demographic front start to kick in and the first baby rooms reach the age of 66 and dramatically pare back spending. Corporate earnings will then hit diminishing returns.
Real estate promises to take another leg down, possibly as much as 25%. This will put the banks through the meat grinder once more, but this time there will be more TARP. You can forget about getting any help from congress on the economy either. It all sounds like a replay of 1937 to me, when the government ended stimulus too soon, triggering a secondary great depression. This could all add up to a real crash of the 2008 variety, with declines of 50% or more on the menu.
So what I am proposing here is not an investment, but a trade. It assumes a dead cat bounce in PE multiple from 10 to only 12.8. Preserving your capital will be the name of the game, while pulling in what incremental trading income that you can.
How could I be wrong? If failing stock prices deliver a self-fulfilling prophesy. If this summer’s melt down in risk assets frighten consumers into paring back spending and corporations into backing off from capital investment, then my growth targets above will like high, and we are already in a recession. Call us “dead men walking.”
It is also possible that structurally low growth is forcing a permanent downshifting of the market’s multiple range from 10-22 to 8-16. Then risk assets will begin plumbing far greater depths. This could also happen if any of the long list of structural negatives listed above accelerate. The only way to stay alive in these markets is to believe that all things are possible at all times.
I don’t know if any of you have noticed, but I have run up seven consecutive profitable trades for my Macro Millionaire trade mentoring program in the past month. Since August 10, the year to date performance for my virtual hedge fund has soared from 19.14% to 36.32%. That easily places me at the absolute top of hedge fund performers during a period when long time veterans in the industry were getting carried out en masse.
I managed to nail the $110-$122 range in the S&P 500 (SPY) early, trading the options from both the long and short side. I played Euro (FXE) shorts for fun and profit. I also caught the two spikes in gold up to $1920, bringing in almost instantaneous profits in puts on the (GLD).
Buying Bank of America (BAC) stock the day before Warren Buffet made his strategic move, causing it to spike 25%, proved to be prudent. The Russell 2000 vaporized after I went short at $74 through the (IWM). The grand slam came with a Swiss franc (FXF) short days before the authorities pegged it to a rapidly weakening Euro, taking my puts up a stunning 400%.
For those who wish to participate in Macro Millionaire, my highly innovative and successful trade mentoring program, please email John Thomas directly at madhedgefundtrader@yahoo.com . Please put “Macro Millionaire” in the subject line, as we are getting buried in emails.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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MHFT is the true "Barbarous Relic". He and his kind will be seen as such in short order. Koolaid drinking fuck face.
Suck a Dick you foppish twit.
"My Stock Market View for the Rest of 2011"...
clearly, a need to call an optopometrist asap.
Sometimes I get cramps real bad like I have to shit but then it passes and I feel fine. And then comes another cramp it comes and goes. Im thinking it was those fucking cheese curds or maybe the jalapeño's. I guess it doesn't matter because at some point I am going to take a big shit I just hope im near a bathroom when I have to go or there will be one he'll of a mess in my pants. Anyone can predict this you don't have to be a doctor. But hey if you wanna pay a doctor to tell you this perhaps you should go see one the next time you get cramps. I should be a financial advisor.
ever heard of Norma Kol ...like norma mae?
"...exporters like Caterpillar..."
Yeah, an excavator for every village in India, Iraq and let's not forget Somalia.
'Even a broken clock is right twice a day' investment strategy...good luck!
"Arrest Ben Bernanke for treason? Really? Where’s the rally in that?"
You have got to be a troll who's only mission is to irritate the readers of ZH. There's no rally in a throat cancer cure either dipshit, doesn't mean it wouldn't be nice to have it happen.
He also stated about 3 months ago that he would be buying silver at or under $10.00.
How's that trade working?
Yet another MHFT embarrassment to TD and ZH readers.
The market will go Down, then up, then down again?
Be still my beating heart: That alone was worth the price of a subscription to ZH.
The likelihood is that this recession is not going to happen.
29.17% defacto unemployment and there is no recession/depression?
http://cwcs.ysu.edu/resources/cwcs-projects/defacto
Mind you, I am not proclaiming the birth of an entire new bull market.
Just +28%. And we do mind you. Very much.
In September, we will start releasing Q3 corporate earnings, which are likely to be buoyant.
Dude, the quarter is not over until October. Buoyant as in the $2000 gold you brilliantly shorted?
Cease and desist this financial pornography at once and for all time. Get a job that pays or get psychiatric help.
Arrest Ben Bernanke for treason?
And Bushes, Cheney, Clinton, Geithner, Obama too? Right. /sarc off
this time there will be more TARP.
/sarc on: Right. And it will rain the Kool Aid you drank with Jim Jones in Guyana.
How could I be wrong?
You were repeatedly wrong and lied about it.
Since August 10, the year to date performance for my virtual hedge fund has soared from 19.14% to 36.32%.
Virtual hedge fund = virtual performance. Figures. Go get a paying job MHFT. You've had so many.
Buying Bank of America (BAC) stock the day before Warren Buffet made his strategic move, causing it to spike 25%, proved to be prudent.
Prudent my Fannie Mae. Were you in the tub with Warren?
mercilessly flailed and tortured daily.
No doubt.
TD, please spare us any further Leos, MHFTs, that Chilean guy's foolishness or your views will decline.
'Q3 corporate earnings are likely to be bouyant'....not with this rising dollar they wont be! Thats the ONLY reason earnings have skated by, a favorable low dollar.
Don't be so hard on MHFT - even a blind pig finds an acorn once in a while
Though the market up, down, up prediction is utter stupidity, I think his Bernake for treason point may come from this--> http://www.cbsnews.com/8301-503544_162-20093433-503544.html I guess it is too much to ask for him to be clear.
will somebody phulllleze take this phucker off of zero hedge. if his track is so good he should stop pushing his newsletter and trading strategy and go and make serious money and manage a few hundey. rediculous schyt. makes me sicker than tea party rehetoric.
Speaking of rehetoric...
Oh,... and I almost forgot. The Crash of 1937 was caused by Marriner Eccles doubling reserve requirements (1936) while dropping the discount rate to 1%. That way his buddies who had the means to get a loan, got one cheaply. But for the rest of the peon's out there, here's a dick sandwich. Of course, Marriner liked Dick Sandwich'es, along with J. Edgar Hoover, John Maynard Keynes, Theodore Dexter White, and before them, Ben Strong and his boyfriend, Montegau Norman. Now if you need another history lesson, Marriner ran the FED for FDR, J. Edgar everyone knows, Keynes ditto, White was Keynes alter ego at the US Treasury and communist spy in the Whitaker Chambers (bi-sexual) scandal, and Ben Strong was the first President of the NYC Federal Reserve Bank, while Norman was the head of the Bank of England. Strong killled his wife and his children were taken away from him by Henry Davison, who took over JP Morgan after the old man died because Jack Morgan was only good for sailing in his yacht between NYC and London. Strong's connection is that he was JP's personal accountant.
man my head is spinning.
Gee, you're smart. You're my hero. Let me get write this down again,... ok,... down, then up, then down. OK, got it!!! Thanks masked man.
Right, I think the correct call is down, then down some more, THEN up BIG, then way down....just placed my trade on that MHFT gee thanks!
Virtually, I have made tens of millons. Not so much when putting actual FRNs on the line.
The only way the market will recover, even temporarily, is if the FED does more POMO; it won't happen organically. They are slowly letting it lower and preventing the plunge that would've happened by now under natural market forces.
Don't know if it's 'confimation bias' or not, but this analysis of what's really happening seems right on to me.
Wouldn't this also--- allowing a drift lower---- slowly, affect the value of ETFs which the 'Treaserve' is using to manipulate the market?
A collapse in earning from 14 to 10 in the S&P when the overall economic situation is predicated on stimulus money and accounting fraud is no reduction on the S&P at all its closer to reality.
is this guy any good? seems to be finding a few winners
You must be new here
Do a search of MHFT
Actually, TD seems to have disabled the search for madhedgefundtrader
Now we know for sure
Good old fashion broken clock syndrome at work.
Your Stock Market view is crowing about past fictional trades?
So MHFT is actually RoboTrader?
WTF!?
WHY is this retard allowed to post here?
What',no recession? Not gonna be likely?
Sure, the market can be manipped into all kinds of continued shitbagging. The job numbers are so promising. Housing has been fixed. Capital formation is where... lost....?
Newsletter buffoons.
Let him post! I'm not very good at coming up with my own ideas but my BS detector works well. I get more good data from the alarm bells going off on "the recession isn't going to happen" than I do on half the other same-old-same-old posts on ZH.
To get to 2% growth for the year, the economy needs to grow by at least 3.4% for the rest of the year. Really?
Either he can't do basic math or he really does live on Hopium and Changium.
Douchium doesn't have a Half life either
"Douchium"
LOL
Gonna add that one to my repetoire. thanks
Did you actually have lunch with Warren Buffet?