No predictions for tomorrow except that it's going to be a weird day, Was (and still am) expecting a head feint upwards through late June/ early July before markets take next and final leg downward. A bigger drop at that point than most would have thought possible. Then -- rather than establishing a bottom over a few days/weeks and beginning a rebound -- a long period of sideways stability through Sept or Oct of 2002 which will have two parallel implications:
1. Those who still have bull instincts will buy into various upward twitches and get their hearts broken. Fewer and fewer will bullishly climb onto successive upward twitches either because they finally changed their minds or -- for those who are permanently bullish -- because they finally lost all their money.
2. When the bull market of 2002 begins, no one will believe it because it will look like yet another head feint. Further, it won't be the now familiar bull as recognized by those who began investing within the last 20 years. Instead, a nice steady growth pattern stretching out into early 2007.
The 2002 bull will be moderate partly because much attention will have turned to real estate and bonds. Investors will be looking at price/dividend rather than price/earnings. Interest rates will have dropped enough to make a lot of us wish we hadn't refinanced to "lock in" rates of 6.X%. If you enjoyed Jan-Mar of 1999 and 2000, the early part of 2007 and maybe 2006 will look good to you. Just remember that you can make a lot of money on the front side of a bubble and there's almost no limit to how much you can lose on the far side of a bubble.
If you're old enough, you'll remember that the first time the DOW went over 1000, it sort of looked around, decided that this was alien territory, went back down to levels where it was more comfortable, and stayed there for years. Same with 10,000. Crystal ball gets foggy as to whether the 2002-2007 bull approaches or exceeds 10,000. Doesn't matter because, either way, people will have "learned" to expect only moderate growth. This expectation sets us up to not benefit from the next bull which takes the DOW to 35 or maybe 40 thousand.
Hadn't intended to write so much. Thoughts just jelled while explaining why a particular Thursday was unpredictable. May refine it and start a separate board for longterm look, but -- if so -- you guys read it here first.
Caradoc
