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,
Tim
Saturday, January 9, 2016
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