Multi Year Equity Cycles

by Ashraf Laidi
Feb 18, 2009 14:30

Multi Year Equity Cycles - SPX Quarterly Feb 17 (Chart 1)

With both the Dow and S&P500 nearing their Nov lows, a breach of those levels is increasingly imminent. My forecasts suggest at least another 30-35% slide in the major indices into the next 6-8 months to be made possible by the next round of hedge fund (and mutual fund) redemptions. Recall that that 52% and 38% peak-to-trough declines in the S&P and Dow in the 2000-2 bear market emerged mainly due to overvalued stocks (and not on a banking or housing crisis). the likelihood for additional declines from the current 53% and 47% peak-to-trough declines is significant. integrating these analysis with my latest on Equity/Gold ratio, 5,300 Dow and 520 S&P500 looms large.

 

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