Rich, the 1600 is for the NDX (hat is what you were quoting), for the Naz I have a potential low of 1900 "only". Of course, Fed intervention in February could change that (I doubt they will change stance in the Dec 19 meeting), but if we get an Asian Malaise developing, there will be a limit as to what we can do here. Hopefully, the Fed left itself enough room on the liquidity side (by soaking funds in the last seven months), but an easing here during an Asian crisis may result in our trade deficit blowing through the $40 Billion per month, that will be, IMTO, untenable and bring about a decline of the dollar and as one of the results, flight of international money from the dollar (some of it into gold of all things). That will accentuate an already precarious condition in the market. I think that the resolution of the problem will occur when the market will present "uncommon" values (the way bear markets often end).
If the fed lower interest rates, they may delay for a short time (few months) the continuation of this bear move. The expectation of a fed move to ease sometime during next spring is one reason that I have a double dip for next year (one in late February early March and one later in Autumn).
As I said before, this is a "rough" picture and exogenous effects (like the undecided election here) could easily change that model.
Zeev |
