A Mad Monk's Vision for 1997 (part 2)
-------------------------------------
8. Political Turmoil at the Pacific Rim
In the middle of 1997, Hongkong will be reluctantly returned to China. What does Hongkong have that could impact the U. S. market? Plenty! Just check the labels from your fancy underwear to your high tech computer. This could be a water-shed event that might trigger first political turmoils in Asia, then world financial market unrests, and ultimately bear claws unfolding. With the rapid advances in information transfer technologies, domino effects should not be ruled out.
9. January Effect
The infamous January Effect will arrive early because of the political fallouts. With a rosy outlook painted by the political landslide and with the cats and dogs already down 50% or more, chances are good for an early January Effect. By the time the johnny-come-latelies are looking for this effect next January, the game would have been over this December, and a top might have been firmly established for the coming decline in 1997.
Hence the market outlook for 1997 is disturbing at best. If all the pieces of the technical puzzle are in place, then prepare for a sharp correction of 20% to 30% from the December/January high. If these amateurish fund managers become panic, a full-fletched bear market will occur. How far down? Nobody knows because it it impossible to put a quantitative measure to panic. Using the 1974 episode as a guide, DJIA around 3,000 plus or minus is not out of the question. Evantually, amidst total disbelief and overwhelming pessimism, a new bull market will be born and will rise from the ashes to a breath-taking recovery in 1998.
You will notice that I deliberately omit mentioning of the conventional stuff such as earnings, sales, P/E, dividend, yields, interest rate, inflation, commodity price and other items. For I believe these items are trivial and have little or nothing to do with the market movements. They are only the alibis and excusses that the analysts give AFTER the market makes its moves. Following the convention wisdom blindly is a one-way trip to the poor house. Why one-way? The IRS tax codes encourage losers to stay put. That's why!
Lastly, why am I writing this? So that you can pat me in the back in the near future? Hell no. My intention is simple: should any of you surfer benefit from my vision in the coming months, I will be spiritually rewarded. Life is wonderful and all good monks go to heaven.
Best wishes to all!
Disclaimer: This is only one monk's opinion and is subjected to changes due to unforeseen events. Proceed at your own risk. This monk is not responsible for any profit or loss in your investments by following this vision. |
