Saturday, January 9, 2016

2016 Off To A Great Start

Hi Folks,

As I have voiced my concern over and over, the market is in free fall.  In the short run I see SPY hitting support at $187 first then $175 if that does not hold.  That's the good news.

The bad news is that the next spike up will be a lower higher followed by a lower low and then the cycle repeats itself until the eventual final bottom.  Again this could take a few years to bottom.  My current target is $88 in SPY representing a 58% decline in the markets from the top .  However, as the debt crisis unfolds, if it turns into a currency crisis my target would be lowered to $44 in SPY.  That would represent a 79% decline in the markets.

Either way the market does not look good and I believe an official recession is around the corner.  The FED recently updated their Q4 GDP forecast.  The initial forecast they gave was 2.5% GDP growth.  Their most recent update was given on January 8, 2016.  They are now forecasting just 0.8% for Q4 GDP.  That is a huge downgrade in expectations.  It is possible that the final Q4 number will be flat or negative.  Follow that with a Q1 2016 negative GDP and boom we are in a recession.

Buckle up, the next few years are going to be a rocky road.

Thanks and Good Trading,