CapitalistMarks

Don’t hang your hopes on the market . . . yet!

Posted on 12. May, 2009 by scott in economic daydreaming, markets

Frankly, there has been far too much enthusiasm for the stock market lately.? The markets are up (at least the Nasdaq) for 9 straight weeks.? Time for a pull-back.

I stick with my prediction of DOW 10,000 but I am moving the date back to July (maybe August).? The old saying is ’sell in May and go away’ but don’t look for that to be true this year.

Sell now, but be prepared to get back in within a few weeks.? I expect a pull-back of 15-20% and possibly a little more.? When the wheels start rolling again the bull will take off for real.

Why?? The stimulus hasn’t really had a chance to take affect yet (and it will), confidence is building (and will only get better), earnings are beating estimates (but from very low expectations) and most of the bad news is in.? Yet the thing that will bring markets down for a few weeks is the financial sector . . . not triggered by real estate again but by consumer debt.? Sadly we haven’t heard the beginning, let alone the last, of this looming problem.

So, my saying for this year is:? “sell in May and wait for only for payday”.? Payday is the aforementioned 15%+ decline.? Pile on after that.

Dow 10,000 this summer.? Dow 13,000 by the end of the year.

After that all bets are off.? Obama doesn’t walk on water and though he is batting about .500 right now that pace is not possible to maintain in our politically charged environment that has just been exacerbated with the news that Medicare will be unfundable very soon.?

That deficit is just a precursor to the Social Security disaster coming down the road . . . a real battle of the titans on that. ? “Conservatives vs. liberals” will seem like the good old days when the baby boomers get hold of that!

Thanks to flickr’s kevinzengli for the photo

Tags: economic stimulus package, medicare deficit, stock market pullback, stock market rally