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The piece was written last Wednesday night, but I've had the downside
targets since late last year.
As for when I think all this can happen, it is something like this:
1) If we have a mini-crash, it will be by the end of this week. My most
likely occurrence is about 10-15% down on the S&P, a bit less on the Dow
and more on the NASDAQ. All sorts of cycles come in for this week, and
with the markets mostly lower for a couple of months, it is more likely
that we get a bottom than a top here.
2) But, with the sentiment as noted by many people, not just here, but
everywhere, that 50 basis points is priced in, leaves me concerned that
we rally on Tuesday and then get a real failure.
3) Most stocks are down, period. More than 1/2 of all stocks were down
last year on the Big Board. I have been writing since last Summer that
the next drop could see neutral or even positive breadth.
4) I do not disagree with BobKC as much as it sounded. I think there are
a heck of a lot of good buys, though not necessarily on the NASDAQ. If I
had my druthers, I'd buy all the large cap value stocks I could. Lots of
members of the Market Technicians Association had joked that the Dogs of
the Dow fund for 2000 was the whole Dow. While that is pushing it, I
suspect that there's enuf stocks down 70-80% from April 1998 to feel
fairly safe being long those now.
5) But, chart patterns say that we need a capitulation. Cisco needs to
go below 50, maybe to 40 or 30. Intel, which I love and own and will
never sell, might need to trade down to 80 or 70. Please remember, if
the NASDAQ takes a 50% haircut, it will only be slightly below last
October's lows!
6) Since, more likely than not, I expect a bottom, or at least an end to
major selling, to start forming a formidable base, I am worried that
bonds, though they will rally sharply during a sell-off, have lower to
go. I expect that the Fed will not stop before 6.75% if we are lucky.
Bonds should slip into the 92:08 range this week and then rally at least
three points on weak stocks, but barring a surge past 97 or so, a final
leg into the 80 handles seems likely (and that will not help stocks
either).
7) A MOVE ABOVE 1460 GIVE OR TAKE A BIT WILL TELL ME I AM WRONG AND THAT
STOCKS (DOW and S&P) CAN GO TO NEW HIGHS. I'd be short from the s-t, but
more on the index side, while holding plenty of individual stocks long.
So, buy index puts, and hold beaten down stocks.
I hope I answered everybody's questions. I really have no more time to
spend on this. It is Mother's Day, and the wife deserves a break. So, no
more for now. If I have a chance during the week, I'll try to keep all
up to date.
Steve Poser
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Steven W. Poser, President
Poser Global Market Strategies Inc.
url: http://www.poserglobal.com
email: swp@xxxxxxxxxxxxxxx
Tel: 201-995-0845
Fax: 201-995-0846
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