Bambs- Thanks for hanging in there...and clarifying..
Looking at 5 year and 10 year Naz charts....a move to the 2200-2500 range...which would be below the channel established since 1995, will equal only one other Naz move in the last 5-6 years.....August-October 1998...
As far as I can tell, that (August-October 1998) is the only time we severly broke down...
If you recall, at that time, it was predicted that the U.S. was heading towards recession; Asia recoveries were threatened, European growth lame (talks of recession there too), Latin America got clobbered; there were real doubts about the functionality of the global capital market (to the extent many were even worried about political stability in Russia); credit spread were absolutely enormous; LTCM scandal was scaring the beegeebes out of everyone (big and small investors), and Rubin and Greenspan were seen as "deer in the headlights" and, temporarily, ineffective..
Truly, "crisis" (or close) conditions..
I see the scenario much different now...sure, this bear has been painful for the longs, but look: Asia/Latin America have recovered and are growing well, Europe is growing (albeit slowly)...there is no concern about global credit conditions....although liquidity has been sucked out of the system, we are not (yet) at crises levels; there have been NO major financial crises (unless you count Soros and Robertson cashing it in, gg)...U.S. growth is now scheduled to trend down to 3-4%...not recession...there is a ton of cash on the sideline..and the dollar is strong..
Also, the internet is getting built, and nothing is going to stop it (that was not as clear in 1998 as now)..
Therefore, the only way I see that we can get to the panicky, "crisis"-type levels of October 1998 (which Naz 2200-2500 would represent)...would be either (1) The Fed seriously miscalculate, and hikes rates much more aggressively than currently expected and/or (2) Inflation is a much more serious than currently thought..(3) Some other major world crisis that has yet to appear.
For your scenario to come thru, we are going to need a LOT more negative news...I'm betting we don't get it...in fact, although we may see a blip up here and there in gvt. data....in the whole, reports will show we are slowing over the next month(s)...earning misses will be confined to loser companies, and not the best of the best tech....
Investors will get more confident, put cash to work, blah, blah...
High 2's are the best you can hope for, IMO, and we may not even get there... |
