Here's where it get tough. We are basically stuck with making up our minds about which half of the year will bring cyclical market highs, and which half of the year will bring the cyclical market lows.
Of course, everyone has an opinion, but when you begin to gather all of the data, picking which half will do what results in a coin flip.
For example, Peter Lee, the wonderful (and pretty accurate) technical market strategists at UBS, believes the first 6 months of 2006 will see new cyclical market highs. After that, it will be bombs away, and new cyclical market lows.
Here are a few predictions from Peter for the first half of 2006:
DOW 12,000
S&P 1350
Nasdaq 2500-2600
a) Mid-Cap growth will have the greatest return.
b) Selective Basic Materials, Industrials, and Financials will lead the way.
c) Stay away from Regional Banks
d) Oil will trade to $70-71/ bbl before the stock market runs into trouble, then $80 by year-end.
e) Energy's strength is in the Oil Service sector.
f) Bullish on Gold; pullback to just above $500, then rallies to $563-600.
OTHER MARKET VIEWS:
This is basically a consensus opinion of many market mavens.
Positive period for the stock market comes to a end in February. Market sells off during the first 6 months, hits the lows for the year, and then rallies into year-end.
DOW 9000
S&P No Consensus
NASDAQ No Consensus
a) Jargon about Fed halting rate hikes is nothing but bait.
b) Housing bubble has popped.
c) Inflation is still strong despite government reports.
d) Fed will not begin lowering rates again until another disaster strikes.
e) Insiders have been selling in mass.
f) Oil prices will remain high.
g) The consumer is tapped out.
So, there you have it. If you were wondering why I have been calling the final rally "edge of the cliff investing", now you know.
