Hi Sonki,
Personally I would not get too hung up on some of these analyst's forecasts for next year. They are likely to be wrong from the standpoint the the market may not react normally to conventional estimates.
My personal feeling is that the market will have an upward bias over the coming months with periodic interruptions to keep the wall of worry at a reasonable level of doubt. The market will be a lot more selective. Some stocks look terminally wounded from a bull standpoint at this time. Ie: their bull market is over for this cycle. However, amazingly other stocks still look awesome... see my recent comments on some of the stronger issues I have mentioned recently, several of them making new highs today.
For the overall picture here are some possibilities that I foresee:
The best case scenario, would be that the strong recovery in the markets continues with the U.S. markets becoming a proxy for a safe haven for global investors, something like what happened in Japan in 1987, where that market continued to new highs soon after the crash. Over time, and it may take some time, our own markets could make universal new highs in most indices.
A more dangerous development of this theme would be that the US markets could become a commoditized cash casino a la Japan with the potential for over-inflated asset values, if the markets were to rise parabolically. This might also affect real estate prices. This is something that the Fed Chairman definitely wants to avoid and I believe he will implement measures to inhibit or prevent it, which could become a real risk in itself.
The next best scenario, would still see a significant recovery in the markets with, (in a flight to quality), the Dow and possibly some other indices making ceremonial new highs. The Nasdaq and broader indices might not fare so well in this scenario, ushering in a classic "Orthodox Top" to the major bull market of the last 15 years. Timeframe for this would be 6 months max and the ensuing correction would probably be in the realm of 20-25%.
The worst case scenario is a fairly anemic rally, wherein the Dow, let alone any other index save the Utilities are able to make new highs. This would probably result in quite an extended correction in terms of time and price, ie worse than above. Unless we go negative on the year between now and December 31, the risk of this outcome is somewhat diminished for now at least.
On the plus side, I think sentiment indicators have been sufficiently rolled back and a number of Gurus have turned negative enough to recreate somewhat of a wall of worry for the market to climb.
The rest of the World's markets have been so bombed out that they will in all likely-hood rally for a while and that should provide a positive backdrop in which stocks can move higher. (Considering I wrote this last, not a bad call given today's action).
Another potential plus is that a good number of stocks including some bell-weather issues continue to make new highs. For example: IBM, an important component to watch from a technology standpoint, is beginning to take on a potentially very bullish posture. If there is a strong breakout and subsequent rally, it could inspire the tech sector leaders like Microsoft, Intel and Cisco Systems. Some stocks could literally explode higher if we get a decent rally going because I am sure that there are a lot of major players, brokerage houses and hedge-funds heavily short this market and that could add fuel to the fire.
Hope this answers some of your questions.
Here are some interesting news items from - newsbytes.com
Third Quarter Proves Healthy For International PC Sales
LONDON, ENGLAND, 1997 NOV 17 (NB) -- By Bill Pietrucha, Newsbytes. Personal computer (PC) sales took on a rosy glow in non-US markets during the third quarter, particularly in Europe, the Middle East and Africa, after appearing a bit pale earlier in the year, according to figures released today by International Data Corp. (IDC). Shipments were up 15 percent in the third quarter of 1997 over the same period the previous year, IDC reports, with desktop sales to businesses, rather than to homes, driving the European, Middle Eastern and African markets.
Comdex - CEO Pfeiffer Sees Compaq As Key Merced Contributor
LAS VEGAS, NEVADA, U.S.A., 1997 NOV 17 (NB) -- By Jacqueline Emigh, Newsbytes. In a Q&A session with the press at Comdex today, Compaq Computer [NYSE:CPQ] President and CEO Eckhard Pfeiffer shed new light on Compaq's positioning vs. Intel, Hewlett-Packard, Microsoft, and Digital Equipment Corp. Pfeiffer suggested that Compaq sees itself as at least as strong a contributor to Intel's Merced as HP.
France Set For Internet Access In Every Home
METZ, FRANCE, 1997 NOV 17 (NB) -- By Bill Pietrucha, Newsbytes. Minitel has come far from its humble beginnings as a 300 baud online telephone directory in the early 1980s. And the next step for France's nationwide information network, run by France Telecom, is to deliver the Internet to every home in France by starting market trials of SurfTV, a television set-top box based on real-time technology from QNX Software Systems Ltd. (QSSL).
America Online Up To 10Mil Members, Stock Up Too
DULLES, VIRGINIA, U.S.A., 1997 NOV 17 (NB) -- By Bob Woods, Newsbytes. America Online's [NYSE:AOL] stock was up four percent in late morning trading, on news that the online service's membership rolls have swelled to 10 million, strengthening its number one claim in cyberspace. Company officials also said its access network continues to be built out, in the hopes that customers will not experience busy signals to the extent they did earlier this year.
regds
Wiz |
