Down goes the Dow

the idiot wrote:

So.....

SP500, the Dow and NASDAQ are about 15%, 19% and 11% off their February highs, respectively. That’s a big bounce up from their lows at about 34%, 37% and 30% off their highs.

What do we all think this means for the rest of the year? Igy has already told us SP500 will get below 1100. I think we’re more likely to approach 3400 again than dip below 1500. My forecast ( not prediction) is between 3000 and 3400 at the end of the year, with roughly 60% confidence. Let’s say 10% chance (in my guesstimating) above 3400, 20% chance between 2500 and 3000 and 19% chance under 2500.

Any other guesses?

since 98% of investors on the planet are bearish I'm not really sure how the market could go a lot lower...unless the disease reawakens.

But predictions...I will not make.

the idiot wrote:

So.....

SP500, the Dow and NASDAQ are about 15%, 19% and 11% off their February highs, respectively. That’s a big bounce up from their lows at about 34%, 37% and 30% off their highs.

What do we all think this means for the rest of the year? Igy has already told us SP500 will get below 1100. I think we’re more likely to approach 3400 again than dip below 1500. My forecast ( not prediction) is between 3000 and 3400 at the end of the year, with roughly 60% confidence. Let’s say 10% chance (in my guesstimating) above 3400, 20% chance between 2500 and 3000 and 19% chance under 2500.

Any other guesses?

As far as I can tell, the establishment is still in denial about the pandemic. Re-open, OK, but how many will want to spend money? Most can’t afford to get sick, many don’t have insurance, others would just be prudent.

Today the market closed under the 4/17 high. Bulls have taken advantage of Fed liquidity to push S&P 500 above Fib 50%, but under Fib 61.8% at 2943. FB, MSFT, AMZN, GOOG, and AAPL spent most of the day negative. All report this week; likely priced in all the good and none of the bad. Optimism on economy re-opening; ignoring significant barriers to V-shaped revovery. Set-up is good for a re-test of the lows.

jesseriley wrote:

As far as I can tell, the establishment is still in denial about the pandemic. Re-open, OK, but how many will want to spend money? Most can’t afford to get sick, many don’t have insurance, others would just be prudent.

^yep

Ghost of Igloi wrote:

George Corwin wrote:

What is wrong with you? Someone asks you your opinion and you insult them?

I don’t think labeling someone as delusional is insulting. Posters who believe markets belong at this level are delusional. What else can I say?

Where did he say he believed markets belong at this level? It seems you are the delusional one.

I did, not referring to him directly. If you read his posts you would assume the same. Look at his most recent posts.

Ghost of Igloi wrote:

I did, not referring to him directly. If you read his posts you would assume the same. Look at his most recent posts.

His most recent posts were written AFTER you insulted him. Sorry, but you are in the wrong here and no amount if revisionist history on your part will change that.

George Corwin wrote:

Ghost of Igloi wrote:

I did, not referring to him directly. If you read his posts you would assume the same. Look at his most recent posts.

His most recent posts were written AFTER you insulted him. Sorry, but you are in the wrong here and no amount if revisionist history on your part will change that.

You hurt my feelings. I am going to cry.

“Bulls can argue that ‘this time it's different,’ that debt doesn't matter and earnings don't matter, but where is the history to support their claim that capital flowing into overvalued stocks is going to generate earned income that can service the exploding debt load?

The crash has only just begun. Everything, including a rational, connected-to-reality, effective financial system, is on back-order and unlikely to ship any time soon.”

—Charles Hugh Smith

the idiot wrote:

So.....

SP500, the Dow and NASDAQ are about 15%, 19% and 11% off their February highs, respectively. That’s a big bounce up from their lows at about 34%, 37% and 30% off their highs.

What do we all think this means for the rest of the year? Igy has already told us SP500 will get below 1100. I think we’re more likely to approach 3400 again than dip below 1500. My forecast ( not prediction) is between 3000 and 3400 at the end of the year, with roughly 60% confidence. Let’s say 10% chance (in my guesstimating) above 3400, 20% chance between 2500 and 3000 and 19% chance under 2500.

Any other guesses?

75% under 2500

20% between 2500 and 3000

4.7% between 3000 and 3400

0.3% above 3400

GAAP EPS estimates for 2020 is down to $113, after $139 in 2019. So 2500 would be a fairly accurate fair value if EPS holds. More likely to be well under $100 GAAP EPS for 2020.

Ghost of Igloi wrote:

“Bulls can argue that ‘this time it's different,’ that debt doesn't matter and earnings don't matter, but where is the history to support their claim that capital flowing into overvalued stocks is going to generate earned income that can service the exploding debt load?

The crash has only just begun. Everything, including a rational, connected-to-reality, effective financial system, is on back-order and unlikely to ship any time soon.”

—Charles Hugh Smith

I actually agree with you in principle. I do NOT think we will see S&P500 at anything below 1800, but I DO think current levels are insane and disconnected from reality. That being said, that doesn't necessarily mean we'll see another big drop. It could simply mean stagnation, but I suspect we will see another big drop once fundamentals become more of a factor.

I want to write more on this later, but I'm currently reading Big Debt Crises by Ray Dalio, and what he describes in there is pretty much exactly what's happening right now. He breaks it out and describes lots of things that happen when rising to the peak, at the peak, the depression, and recovery, not just your Econ 101 stuff either. I think we are experiencing an "everything" bubble fueled by passive investors and novice investors using apps like Robin Hood to dump money into the market wherever they get a tickle or think they can make a quick buck. The article below supports that idea.

Furthermore, Berkshire Hathaway is sitting on $130 billion in cash, more than 25% of their total value, and the total market cap to GDP ratio suggests a return rate of -2% over the next twelve months INCLUDING DIVIDENDS.

I am still investing but looking for bargains. I am NOT blindly putting money in any broad market index funds and am strongly considering moving a large portion of my S&P500 index fund to cash as I think another 10% drop is likely, or at least there are better bargains out there right now than a broad market index fund that is likely to return ~0% over the next year.

Whoops. Posted the google search instead of the article.

https://www.cnbc.com/2020/04/23/young-investors-rush-into-struggling-oil-etf-that-isnt-even-tracking-the-price-of-oil-anymore.html

Ghost of Igloi wrote:

“Bulls can argue that ‘this time it's different,’ that debt doesn't matter and earnings don't matter, but where is the history to support their claim that capital flowing into overvalued stocks is going to generate earned income that can service the exploding debt load?

The crash has only just begun. Everything, including a rational, connected-to-reality, effective financial system, is on back-order and unlikely to ship any time soon.”

—Charles Hugh Smith

What history tells us, Charles, is that for the past 60+ years valuation has been less than 10% of the price of a stock on average.

And, no, this time is not different.

What drives commodity prices the most, so far as I can tell, is simple supply and demand.

Bulls on oil routed, bears will short until they’re halted by SEC.

June contracts for Texas crude down to $10. If it was milk they’d dump it on the ground, but intentional oil spills aren’t allowed lol.