The 950 is my current target for the bottom in the Naz multi years secular bear (see my April 2000 discussion of the coming multi years malaise), I think it may take place sometime maybe as early as late 2004, but more likely, the bottom not be reached until late 2005, after a mini secular bull market starting later this year (providing the Iraq situation is resolved) lasting for about 12 to 18 months.
My rationale is quite simple, the July lows have "forecasted" the second dip in the economy, we are going to go through a slow and painful recovery starting possibly in the last quarter, maybe the first quarter of next year. I don't think that recovery will be strong enough, and the fed really have no ammunition left to pump it further. Similarly, on the fiscal side, particularly if we need to finance a war, we will be limited with our ability to stimulate the economy. After we exhaust a lot of pent up demand (if any is left) with zero financing, and extremely low mortgage rates, yet fail to create a real boom that add jobs and thus reinforce the economic cycle, we should be ready to top again late next year or early 2004. Most "pundits" see a three years cycle of economic expansion at least, but the best I see is a year to 18 months of expansion. If I am right (and I'll revisit these assumption later this year), then the next expansion will not be enough to cause major growth in corporate earnings (we probably will not exceed 2000 corporate earnings during 2003). Thus late next year, we will still find ourselves with an overpriced market (particularly if most of 2003 will be a bull year), excess debt both in business and in consumer land and that will require another "retrenchment" to rebuild balance sheets of corporations and consumers, namely another recession. That will make Bush 43 a one term president, just like his father, and may set the stage then for a powerful secular bull market (that one possibly a three years affair, but I can't "see" that far in the future). Because 2004 is an election year, the market might be propped up artificially, creating a broad topping formation, and the actual big bad bear bottom not happen until Autumn 2005, we'll see late next year how 2004 is shaping up.
The 950 number assumes that the Naz bleeding of listed stocks (a horrendous 1500 to 2000 issues since March 2000, we had about 5300 listed stocks trading daily then and now we average about 3300 to 3500, if someone has better numbers on total Naz issues then and now, please step forward) will finally end here. Don't write off even lower bottoms for the Naz.
Maybe I should reiterate the main issue with the market "It is the valuation, stupid <g>" and it takes year for one set of psychological stock valuations to be replaced with a new set, and typically, stock will return to extreme undervaluation before they get back to the norm. By the time they get back to the norm, we should once more be at the beginning of a secular bull market in which Dow 16,000 of Da Cheif, is not a dream but reality, but I dont see that number until we go through at least three cyclical bear markets within the secular bear market, we are now finishing the first one, the second one may not end until Autumn 2005, and the fimal one, who knows.
Zeev
