...........................................................................................................................................................................lemput said:
Hi Lemput - My view is very bearish on the Dow and I think that we could see it go below 10,000 over the next few months. Why - because we are reaching a critical point in the US economic cycle with an escalating trade deficit, an escalating budget deficit, an asset bubble particularly in the housing market, the signs of growing inflation and further interest rises from the Fed. There is no easy resolution of these problems which are all coalescing at the moment and Greenspan can't keep this tightrope act going for much longer.
However timing is critical and we need a catalyst to really trigger a market drop of 400/500 points which of course will not happen overnight. In the meantime there are still some Bulls out there who have not given up and we can expect to see one or two short term bull rallies before it goes down. I would be extremely nervous going long on the Dow to ride any of these and I'm continually looking to go short. I've run a number of profitable short positions over the past few weeks as it moved down from 10750 and I'm currently short at 10525.
I use fundamentals as well as technical signals (I'm weak on the latter) as my main signal points and I'm hoping to improve my understanding of the technical aspects over time - some of the dialogue on this board is really helpful in that respect.
Anyway thats my take on the current scenario - good luck to everyone here.
