Mark, I agree with your liquidity thesis (add to that a sum of $500 billions over the next 12 months that need to find a home), yet with valuations stretched indicating weak fundamental reasons for current prices, and with technicals falling apart (as we advanced in the last few weeks, the new highs were going down and the new low up !!!, forget about the A/D line which is sitting as moribund as if we were in the middle of a bear), I think the breach of 10,000 either on a temporary basis or closing basis could very well serve as trigger for a good 15% decline (I have the range of 8250 to 8400 on the DOW as the resting place of the next through sometime before the end of June). At that time, particularly if interest rate on the long bond manage to get back under 5%, I expect the liquidity thesis to reemerge as a leading drive for a powerful rally. Long term, however, I do not think that the DOW will get much higher than few hundered point above the 10,000 level for a good five years.
Zeev |
