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rofgile (98.99)

DOW 10,000, soon S&P 1100 and then.. flattening of the markets.

Recs

5

October 14, 2009 – Comments (16)

We are just starting a positive earnings season of Q3, with good reports from Alcoa, Intel, and JP Morgan.

Just a couple of companies positive news has driven us to DOW 10,000 today.  S&P is 8 points away from my predicted target of the last several months of a range of 1100-1200 in the year 2009.  

We still have a couple more weeks of earnings season, and it is likely that we could go much higher into the 1100 S&P range soon.

When we crossover further above DOW 10,000 and S&P 1100, these will become psychological barriers, setting a strong lower bound on the markets.  This has happened previously (link ), where after crossing 10,000 the market clings to this waypoint for a while.

The markets have risen quite fast, and strong over 2009.  While there is lots of good news to be expected if we are truly entering economic recovery in Q3 of 2009, its time for the news and market to catch to each other.  

I expect that when we enter into the range of S&P 1100-1200 that we will stay there for a long time.  To go higher would enter irrational exuberance mode and require all the individual investors to come off the sidelines - I don't see that happening until unemployment falls below 8%.  

 

 -Rof 

16 Comments – Post Your Own

#1) On October 14, 2009 at 9:16 PM, awallejr (80.12) wrote:

Markets also crashed quite fast and hard in 2008/2009.  I don't see DOW at a "giddy" point yet.  It is also still down 4000 points from its 2007 high.  There are still alot of quality stocks out there and great "yielders" too.

Weak dollar, low interest rates (which FED has said over and over and over that they plan on keeping low for an extended period - a word people just don't want to accept), pumped up liquidity.  These are all ingredients for continued market improvement, with apparently shallow and short corrections (3-5%).

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#2) On October 15, 2009 at 12:18 AM, rofgile (98.99) wrote:

awallejr:

 We'll see what the future brings.  I foresee a general slowdown to the rise after S&P 1100, and however around a psychological marker like DOW 10,000 makes a lot of sense to me.

 I also think many stocks like GOOG or AAPL are fairly priced or even a little overpriced at this point, as we don't know that the US consumer will return at the same level of 2003-2007 any time soon.  I would hope for the savings of the nation that he doesn't, but we have a more gradual restructuring of our economy around more competitive exports lead helped by a weaker dollar.  

 There are still great deals out there on stocks among manufacturing companies,  financials, among other sectors.    

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#3) On October 15, 2009 at 12:18 AM, rofgile (98.99) wrote:

s/however/hovering/

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#4) On October 15, 2009 at 1:30 AM, awallejr (80.12) wrote:

I think people overplay psychological numbers.  DOW will rise because of greater risk taking if anything.  The number will simply follow. I wouldn't short change AAPL, though.  Cramer, to his credit, made a very compelling argument with the accounting rule change plus I suspect it will do very well in the China market.  I just recently bought an Iphone and love it (I own T, and VZ as well).

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#5) On October 15, 2009 at 1:32 AM, awallejr (80.12) wrote:

P.S., I always add to T under 26, and Vz under 30.  They both should lag now, but once a full recovery gets under way, they will outperform (now is the time to accumulate in my opinion while the prices do lag, plus you get an excellent dividend).

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#6) On October 15, 2009 at 1:46 AM, portefeuille (99.78) wrote:

I don't think we are at some kind of "special" point. It looks like business as usual for me.

the S&P 500 index since 03/09/09 (some "smoothing" by interpolation).



enlarge

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#7) On October 15, 2009 at 1:46 AM, portefeuille (99.78) wrote:

for me.

to me.

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#8) On October 15, 2009 at 2:03 AM, DEALWITHTHEDAY (33.97) wrote:

Based on your smooth chart it appears the market is just starting to get ahead of itself. I say this expecting the next couple of days to be on the positive side. I am expect a 3 to 7% pull back near 1100.

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#9) On October 15, 2009 at 2:12 AM, portefeuille (99.78) wrote:

Based on your smooth chart it appears the market is just starting to get ahead of itself.

Yes, that may be what the chart suggests.

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#10) On October 15, 2009 at 2:18 AM, DEALWITHTHEDAY (33.97) wrote:

Thanks.

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#11) On October 15, 2009 at 10:14 AM, rofgile (98.99) wrote:

Porte:

 Do you ever make a refit of your curves with more recent market data points?  Just curious, as it might change the bounds of the market index. 

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#12) On October 15, 2009 at 10:45 AM, portefeuille (99.78) wrote:

Do you ever make a refit of your curves with more recent market data points?

The green curve shown in comment #6 above is more or less still the one I proposed on 06/23/09.

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#12) On June 23, 2009 at 3:14 PM, portefeuille (99.99) wrote:

one (hopefully last) correction:

p(0) = q(0) = 676.53 and the fitting function is

p(t) = p(0) * exp (1/15 * t^(0.37)), where t is in [0,76].

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(from here)

The green curve shown in comment #6 above is an interpolation of this function

p(t) = f(t) * p(0) * exp (1/15 * t^(0.37)),

where p(0) = 676.53 and t is numbering the trading days and

f(t) = 1 - exp (-t).

So the only change I made is the introduction of f(t) to improve the fit for the "first few" trading days (f (6) = ca. 0.9975).

 

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#13) On October 15, 2009 at 10:50 AM, portefeuille (99.78) wrote:

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#15) On June 23, 2009 at 11:08 PM, portefeuille (99.99) wrote:

Here is the picture: 1. Not really that spectacular I must admit, but this type of functions fits in other cases as well (see comment #8 above). So just wait for further "evidence" ...

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(from that post as well)

the chart linked to that comment #15.



enlarge

 

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#14) On October 15, 2009 at 10:51 AM, portefeuille (99.78) wrote:

I am still quite satisfied with the fit.

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#15) On October 15, 2009 at 1:47 PM, rofgile (98.99) wrote:

Porte,

 I guess I was just curious, that if you repeated your fit now, with all this data - where the predictions of future direction would be?  I would assume the trendline might be a bit higher, and show the dips as further away from the trendline than your fit from 6-09.

 Anyways, I think your trendline has been beautiful!  

 Today might be an example of the psychology coming into play, I've seen 10,000 on so many media sources, and the DOW has just been nudging back and forth around it.  I was expecting some profit taking (and I sold some of my MTW shares today, along those lines of thought).

 -Rof

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#16) On October 16, 2009 at 12:32 AM, awallejr (80.12) wrote:

I wouldn't dump all your MTW (tho profit taking on some is fine).  I hold it as well in real life and fully expect to eventually sell it in the 20s. 

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