Well finally we are in the killing zone. I was preparing my clients since July.
So what is now? The issue of Quantitative Easing ending or, better said, the Fed is running out of tools for the economy – while the politicians have not done their bit since 2009?
Whateever it is (I wrote at length about this issues the entire year. Let’s make some forecast.
A big warning; I came up with this forecast in August as some readers know. They are intact unless a black swan event hits (the four main visible issues are: liquidity issue in the high yield bond, Turkey/Syria, Ebola, Baghdad in a major battle (hard to see it fall as there are a lot Iranian trained Shia private armies, anything weird coming out of China) or a Putin’s revenge).
The US market has a minimum target of SP 1,820, which on momentum could be broken to area 1,750 (and this is my baseline)
If something happens in this area we can see in a flash SPX1,600 (the base of this rally) but I think not
This badness should exhaust by mid November after the US Mid Term Election.
By the year end we should be back around 1,950 until early January.
I can’t really see beyond this points – but we could be in for a strange 2015 ( a long going nowhere scenario or a crash).
If a Black Swan Event appears at the most weak – the gates of hell will open and we go back to 2008 scenario as all the issues hidden in the market will come to light and devastate the economy for a long time – but it will not happen, hopefully
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