S&P - Next 2 Years

[Wicked_Daddy]

Greetings all,

Been awhile since I checked in. Some friends and I had a lively discussion about the future of US stocks over the next 2 years, with the S&P being the gauge. I would like to get a more "world view" from traders here.

So, what is your prediction for the S&P over the next couple years? Do you base your opinion on TA, FA or both?

I'll start by saying that the current bull cycle has become almost parabolic and over-stretched (technically). Clearly, a correction is due but the market has lacked a strong enough fundamental catalyst to sustain any depth. Still, the further it pushes upward, the weaker the catalyst can be to cause a frenzy of profit taking and then a fear based sell-off. I think we could see a mild correction mid summer, 2018, which would mark the first "lower low" with a recovery not to exceed the current average. Then a real correction to 50% of the almost parabolic rise from 2000, to around 2300 or as far as returning to the previous 2000 area, which held steady for approximately 18 months from late 2014 through mid 2016.

 

[tomorton]

All I'd like to predict is that I'm going to follow the S&P, especially when the Nasdaq is in technical agreement. I'm still long the S&P index even though its clearly over-stretched. But I thought it was over-stretched in 2003.........

More seriously, I am TA only when it comes to indices: the professionals do FA much better than I could and then I follow their money. When the major stock indices are all looking really strong I'll also take some of the member stocks in indices I can't trade directly, like the FTSE AIM100 and FTSE250.

 

[tomorton]

PS. Welcome back.

 

[Atilla]

TA is not much cop with out FA agree 100%.

Where or why would a 50% correction come about I have no idea?

Billions and trillions of money floating around where you gonna stash all that lolly away.

One example, if you take it out of stock market and stick it into tangibles it still going to raise earnings for companies producing the stuff.

There is no correction to make. Global economies pumped up with cash and that cash needs to move around and move around it will.

What with the dollar losing value too will lead to more purchases of US goods.


One way ticket. Forget guessing the correction and just carry on as you were

 

[counter_violent]

TA is not much cop with out FA agree 100%.

Where or why would a 50% correction come about I have no idea?

Billions and trillions of money floating around where you gonna stash all that lolly away.

One example, if you take it out of stock market and stick it into tangibles it still going to raise earnings for companies producing the stuff.

There is no correction to make. Global economies pumped up with cash and that cash needs to move around and move around it will.

What with the dollar losing value too will lead to more purchases of US goods.


One way ticket. Forget guessing the correction and just carry on as you were

Agreed 100%. But then that presents me with a problem.

How can you be so wrong about Brexit !

 

[new_trader]

Inflation

TA is not much cop with out FA agree 100%.

Where or why would a 50% correction come about I have no idea?

Billions and trillions of money floating around where you gonna stash all that lolly away.

One example, if you take it out of stock market and stick it into tangibles it still going to raise earnings for companies producing the stuff.

There is no correction to make. Global economies pumped up with cash and that cash needs to move around and move around it will.

What with the dollar losing value too will lead to more purchases of US goods.


One way ticket. Forget guessing the correction and just carry on as you were

The problem with your theory is that a large proportion of the "US" goods are manufactured in China.

Interest rates are starting to rise...global inflation is on the rise...

Things are going to start getting real ugly...but this inflation "party" and the false prosperity it brings will be celebrated in the mainstream media for a while yet...but another crisis in on the horizon, just like the last one nobody could have seen coming...or the one before that...or the one before that...etc

 

[kalott]

I think the upside is limited from here

i know "they" (what ever it takes guys) will probably not let it chrash but needs to cool off this parabolic move

so for 2018 sideways, more volatility perfect for swing trading, and the year will end probably +-0

2019? maybe same as 2018 but even more volatility?

 

[kalott]

only 7 "buy the dip" 2017

maybe this year gives more opportunities

 

[tomorton]

only 7 "buy the dip" 2017

maybe this year gives more opportunities

Still a terrific year.

 

[Atilla]

The problem with your theory is that a large proportion of the "US" goods are manufactured in China.

Interest rates are starting to rise...global inflation is on the rise...

Things are going to start getting real ugly...but this inflation "party" and the false prosperity it brings will be celebrated in the mainstream media for a while yet...but another crisis in on the horizon, just like the last one nobody could have seen coming...or the one before that...or the one before that...etc

Well it's not so much as a theory as an important consideration.

If people sell up they're going to get cash out of stocks so what are they going to do with all that cash?

The mind boggles.

I thought we'd have inflation long time ago but still don't see it. The inflation we do see is self inflicted as a consequence of currency fluctuations. Look at Japan has been in deflationary state for decades. So wrt inflation the jury is out I'm not sure about it anymore.

US may have inflation as dollar depreciates but that's as above. I do think they will need to raise rates to attact buyers for their useless G debt. I see positive outcome for gold as dollar loses value and oil is rising at the moment not because it's scarce but simply because dollar is losing value and global growth is strong and continues to do well.

So coming back to the original bloggers TA analysis about a 50% correction I can only ponder how?

Oscar indicated the global economy is doing well because of Trump and Brexit and I almost fell off my chair laffing my head off. I dunno perhaps if Trump gets jettisonned and Brexit is over turned the global economy may crash 50% who knows? He could be right!

 

[new_trader]

Gradually then suddenly

Well it's not so much as a theory as an important consideration.

If people sell up they're going to get cash out of stocks so what are they going to do with all that cash?

The mind boggles.

You keep mentioning "all that cash" but you are ignoring all the associated debt. You are only considering one side of the balance sheet.

I thought we'd have inflation long time ago but still don't see it. The inflation we do see is self inflicted as a consequence of currency fluctuations. Look at Japan has been in deflationary state for decades. So wrt inflation the jury is out I'm not sure about it anymore.

It seems as though our understanding of inflation is very different, in fact I know it is. The evidence of inflation is everywhere but I suppose you won't see it until it becomes extremely obvious.i.e. Until the Central Bankers tell you.

So coming back to the original bloggers TA analysis about a 50% correction I can only ponder how?

TA is giving me amber warnings. A 50% or more correction within the next 2 years is not beyond the realms of possibility. This means the markets can still soar to new highs making the subsequent crash that much more spectacular.

 

[new_trader]

Speak of the DEVIL

Interest rates are starting to rise...global inflation is on the rise...

2-year Treasury yield tops 2% for the first time since 2008 as inflation rises
http://www.cnbc.com/2018/01/12/bond...s-bonds-data-on-the-agenda-for-investors.html


Gradually, then suddenly:!:

 

[Atilla]

You keep mentioning "all that cash" but you are ignoring all the associated debt. You are only considering one side of the balance sheet.

Don't mean to upset but does G debt really matter that much?

Do you think it will ever be paid back? :whistling

Can it be paid back?

Should it be paid back?

It seems as though our understanding of inflation is very different, in fact I know it is. The evidence of inflation is everywhere but I suppose you won't see it until it becomes extremely obvious.i.e. Until the Central Bankers tell you.

I know what you mean here but I did acknowledge that inflation you are referring to a large % has been as a consequence of currency fluctuation.

I don't think we disagree on inflation but perhaps underlying cause is what we should be discussing. Is it a case of Excess Demand > Supply or simply currency fluctuation?

TA is giving me amber warnings. A 50% or more correction within the next 2 years is not beyond the realms of possibility. This means the markets can still soar to new highs making the subsequent crash that much more spectacular.

TA warning is just a statistic like in the last 80 years temperatures in Australia never went above 47C and thus based on TA temperatures should drop back down to some average variant. Well maybe and maybe not. If global warming the FA, continues why shouldn't temperatures reach 49C even?

If we get a 10 or 20% pull back even 30% be yeah ok so what, move on nothing to see here sort of thing.

Talk of 50% fall is really stretching the imagination. Reminds me of the 15% drop in housing which bounced back with early green shoots as early as 2009 when some people were getting upset on these threads about challenges to their 50% melt down in property prices. Now look where we are.


Look at fundamentals? Forget TA for signs. Candlesticks maybe for reading psychology of the market but on the whole TA is not much cop imo.

 

[kalott]

"A prolonged bull market across stocks, bonds and credit has left a measure of average valuation at the highest since 1900, a condition that at some point is going to translate into pain for investors, according to Goldman Sachs Group Inc."

is this FA

https://www.bloomberg.com/news/arti...est-valuations-since-1900-mean-pain-is-coming


where are we now?

https://i.pinimg.com/originals/64/6e/22/646e22ac92c55d4ab2b67ad58ae72615.jpg

 

[tomorton]

50% correction? Where's this come from?

Anyway, for all I know (care), 2018 could see a 50% correction. I will be in cash by then, hopefully short by then.

Be aware that 16 of the 20 worst single day falls in the Dow since 1900 came in downtrends, not suddenly out of the blue in a clear no-brainer bull market.

 

[Atilla]

"A prolonged bull market across stocks, bonds and credit has left a measure of average valuation at the highest since 1900, a condition that at some point is going to translate into pain for investors, according to Goldman Sachs Group Inc."

is this FA

https://www.bloomberg.com/news/arti...est-valuations-since-1900-mean-pain-is-coming


where are we now?

https://i.pinimg.com/originals/64/6e/22/646e22ac92c55d4ab2b67ad58ae72615.jpg

When has the market ever been below what it was in 1900?

 

[kalott]

I wonder how far away a "full house sell signal" is?

"the full house buy" in september 2015 nailed the bottom..

and they also found the top in 2007

"By Ambrose Evans-Pritchard12:01AM BST 06 Jun 2007
Morgan Stanley has advised clients to slash exposure to the stock market after its three key warning indicators began flashing a "Full House" sell signal for the first time since the dotcom bust."

http://www.telegraph.co.uk/finance/...y-issues-triple-sell-warning-on-equities.html

http://www.telegraph.co.uk/finance/...pe-equities-China-bank-stocks-1998-bonds.html

 

[kalott]

"Morgan Stanley chief equity strategist Mike Wilson has expected the S&P 500 to reach 2,700before selling off in a sharp correction, but now he expects the S&P to go higher to peak at 2,750. "

"The Morgan Stanley strategists said the stock market has yet to see the "full-blown euphoria" they called for in the beginning of the year, and the final missing ingredient to bring the bull market to an end could be new flows from retail investors.

"We suspect that could happen in early 2018 with the signing of a tax bill,""

https://www.cnbc.com/2017/11/27/morgan-stanley-sees-market-peak-in-first-half-of-18.html

 

[kalott]

now they are talking about 3 000..

""Buy Puts Now": Morgan Stanley Issues A Warning As S&P Calls Hit All Time Highs"

"First this is not a call for the final top – positive sentiment and positioning can have momentum of their own and absent some kind of shock likely take the market higher. But the rally is getting more fragile – as MS Equity Strategist Mike Wilson notes in Weekly Warm-up: Euphoria! (Jan 16, 2018) "The bottom line is that we have entered the late cycle euphoria stage we predicted a year ago.” and “it is more likely the S&P 500 will reach our bull case of 3,000 before it's over. We just want to make sure investors appreciate this is higher, not lower risk than the rally we experienced last year.”"

https://www.zerohedge.com/news/2018...ey-issues-warning-sp-calls-hit-all-time-highs

 

[Atilla]

now they are talking about 3 000..

""Buy Puts Now": Morgan Stanley Issues A Warning As S&P Calls Hit All Time Highs"

"First this is not a call for the final top – positive sentiment and positioning can have momentum of their own and absent some kind of shock likely take the market higher. But the rally is getting more fragile – as MS Equity Strategist Mike Wilson notes in Weekly Warm-up: Euphoria! (Jan 16, 2018) "The bottom line is that we have entered the late cycle euphoria stage we predicted a year ago.” and “it is more likely the S&P 500 will reach our bull case of 3,000 before it's over. We just want to make sure investors appreciate this is higher, not lower risk than the rally we experienced last year.”"

https://www.zerohedge.com/news/2018...ey-issues-warning-sp-calls-hit-all-time-highs

Higher risk?

How is it higher risk? What is higher risk?

Higher risk is take your money out of high dividend and capital gaining stocks and shares and stick it in what exactly? The great unknown! That's risk to me.

Trump's just given away trillions of corporate tax cuts. Where are those trillions going? Not only that, they'll be raising debt and selling TBs to finance that debt. Hey presto more money to services social payments.


Crazy fools!


Money has got no where else to go but the stock market!

Sell the dollar buy the Euro. Watch this space.