The March-April timeframe has always been a volatile period for investors. I don't think that this time will be any different. While I am expecting a fairly stiff correction, I do not believe that this is "the big one" (Fred Sanford saying) that many investors have been anticipating.
On the downside, we many see as little as a 5% pullback, or as much as 10%. After the pullback, I am expecting a sharp rally to 11,500 on the Dow, and 1350 on the S&P.
Sometime in Q2 and Q3, I am expecting a much more serious decline that could take the Dow below the 9000 mark, the S&P below 950, and the NASDAQ to 1750.
By year-end, I am expecting the markets to rally sharply, and push the Dow back up to the 11,000 mark.
Several times in our journal I have shared with you my concerns about the economy, so the news of a sharp decline in Q2 and Q3 should come as no surprise.
As far as how to play the current market, I believe that sitting and waiting will bring higher rewards than trying to bleed the last ounce of juice from this turnip.
I like our position in energy(MRO,COP,CHK,SUN,VLO,XOM),financials (BAC,JPM), and consumer staples (KO,BUD,XLP,NSRGY). Our deep value, big dividend payers are also drawing the attention of the institutions (VZ, T).
With our market hedges are in place (RYTPX, RRPIX), I feel very comfortable with where we are.
I will be out of town until Thursday. My son and I are going to South Florida to watch a few spring training games and relax.
I'll try and check-in if an earth shattering event takes place, but I am looking forward to a few days off because I really need the rest.
Comments (1)
john, i find your comments invaluable. thank you and enjoy your break. the volatility of these markets is tiring.
regarding your post expecting that the march /april correction is not the "big one": could you elaborate? is that a technical view or a feeling that the higher interest rate scenario will take longer to play out and impact on underlying confidence ? i have positioned for a correction since the start of this year ,but all i can say is that a "big one " is overdue. i am interested in your more precise outlook.
Posted by copper-red | March 13, 2006 5:02 PM
Posted on March 13, 2006 17:02