To: Johnny Canuck who wrote (48178 ) 6/29/2012 8:43:44 PM From: Johnny Canuck 1 Recommendation Read Replies (4) | Respond to Market Call Tonight: For video, market analysis and more click here Market Outlook: The potential for a sharp rally beginning sometime between mid-July and August is high. I am targeting 1,500 for the S&P 500 into the early part of 2013. Briefly, my reasoning behind expecting a buying opportunity in that time period are: 1. Federal Reserve monetary stimulus cycles: Markets have tended to sell off prior to the ending of a Fed QE program, and then rally from August and on as rumours circulate about the beginning of a new QE program. There is potential of a new Fed action later this year, in addition to the current extension of Operation Twist. There the Fed has indicated its willingness to use additional measures to offset the negative repercussions of the European malaise as is necessary. 2. Presidential election cycle: The second half of year tends to be positive in election years, according to Ned Davis Research. 3. Seasonal cycles: Seasonal patterns appear to be "pushed to the left" (shortened) in recent years as volatility has risen. For example, the traditional "best six months" seasonal buying point was July/August during 2009, 2010, 2011 rather than the more typical November buy point. 4. Acceptance: News out of Europe will eventually absorbed and accepted [UTF-8?]– whatever solution comes out of the current situation. Eventually, things become oversold, and markets move up despite the news. 5. Market fundamentals: They are actually looking reasonable, albeit not screamingly cheap. Trailing PE is around 15 on the S&P, which is its long-termed average. 6. Mid-termed bull market intact: The mid-termed bull market, which began March of 2009, still has one last leg in it. The decade-long technical resistance point of 1,500 on the S&P 500 will be reached in the new year. I'm expecting that level to be the peak of this cycle.
