SP 500 will drop below Sept 21 low

Within 2 months. It's going to be brutal...unless you're shorting.

why? and I am not arguing but some reason would be nice. is this based purely on chart action or economic data/news? your survey?

Well...I think cooler heads prevailed after the 9/11 attacks. Though the human cost was huge the effect on the economy was temporary and more shallow than people thought at the time. Beyond airlines and hotels/tourism I can't think of many industries that were hard hit for an appreciable amount of time.


There is no reason to think the 9/21 level is a true support level. In fact, you'll see on an SP500 chart that it's basically the same support level as the aftermath of the Long Term Capital Management/Russia crisis. Those lows were caused by panic over something a more efficient market would have almost glossed over. I think this time people will be horrified to realize this downturn is due to prospects of a truly weakening economy rather than panic induced by some overhyped catastrophe.

When are we going to see this weak economy? I don't see it coming at all. Only risk I see is inflationary concerns as a result of a weakening dollar. Weak economy is highly unlikely though, there is no base inflation worries (outside of import inflation) and an incredibly strong and diverse business economy here. The rest of the world is growing which will greatly increase our exports very shortly. In fact I think that might be the huge surprise of this all. American products might not be terribly competitive due to the FX, but the cachet the American names and quality in services have is unbeatable and will drive a strong export surge soon due to the more favorable FX that the market seems to be demanding right now. The US economy succeeds because of a far superior work-force in structure and capital, that advantage won't go away anytime soon.


As for S&P prices, it might go a little lower, but I sense a reversal coming not too far away. So many bears have come out of the woodwork that the standard rally to clean out the shorts could be on its way when you least expect it.

I thought a recession was two consecutive negative quarters of GDP growth. Haven't seen it yet. There is a capital spending depression but it's only one component of GDP and I'm sure that we've seen the trough in it too. I agree with you about the the economic risks. The dollar was so strong for so long that I don't find the current decline that troublesome. That means watch the price of the dollar vs. the yen and vs. the euro very closely.

A bet on a weakening economy is a bet in my mind on a weakening consummer. With all of the investment guru's that I see recommending companies that derive revenues from consummer spending perhaps there is something to be said for a weakening consummer.