yujin7 (< 20)

Market Analysis: S&P500: Bull market decline, Target 1110

January 22, 2010 – Comments (2) | RELATED TICKERS: FAZ , SRS , SMN

 I think we have indeed hit a top for now as i have written in my previous blog, i expect this bull market decline to continue for awhile.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=330119&t=01005358056695109832

For the S&P 500, i have a target for this decline at 1110 for the , the next strong area of resistance would be at 990, a worst case scenario, we can expect it at 950 level before the rally continues. As for timing of this decline, i am suspecting a straight short down before the rallying continues, possibly a bottom in 1- 2 1/2 months. Fundamentally, this is just a correction of the market running ahead of itself. If you all haven't noticed, China has been leading decline for 3 months which was since November, or you could say 6 months since a top was reached in 2009 August for the CSI 300, and I expect the US to follow suit.

We can expect some bad news coming out, but not enough to weigh down the overall market that far as people has generally regained confidence, i expect many to take this as a buying opportunity. Over the long haul i expect US growth to slow, since from the sub-prime mortgage crisis we will see Americans spending less and learning to save more, together with much tighter regulation from the govt, and higher taxes. This is in contrast to China, as we can expect them to loosen regulation over time, as well as see the Chinese spending more, who are known for saving. The transition from export-based economy to domestic driven, while we will see the opposite for the US, from domestic to export-based once again.

Taken call option positions in bear market ETFs, as well as a short list of other stocks. At the same time, this will be a good time to sift out for great buying opportunities for stocks that i have been eyeing for along while whose valuations might be a tad too expensive.

Good luck.

Yujin~