I'd love to hear some opinions on the support levels & justifications.
Tom, I'm not sure Telescan's call of a 30-35% "correction" (wouldn't that qualify as a genuine bear market?) can be justified based solely on what looks like the inverse of a PEG ratio, but they do have a point. At record levels for PEs and with earnings growth said to be stalling, at least for the first half of the year, that big a move is entirely possible IMO. A 30% decline would only knock the S&P's PE down to 20, a level which is still well above average, especially when not at the end of a recession.
As for support levels (assuming this weeks low is to be visited/broken again), the S&P's 200DMA is in the vicinity of the October high, so there's two reasons to expect support. That's about 12% down from here. The Feb/Mar '97 highs are in the neighborhood of 30% down.
It may be un-American to say so, but 30% down would be nice to see. I'd make a few bucks, but more importantly, I think I could actually find value plays again.
Regards,
Bob |
