Market Comment. What We Are Looking For Now Through 2011. Bullish

[ 0 ] December 9, 2010 |

Below, please see comments received this morning from Fred Lange on the Markets. Fred got me very bullish in the end of July- early August and has called things pretty much dead on correct.


Our expectations are that earnings for the S&P 500 will at least reach an annual rate of $100 in 2011, and significantly higher in 2012. As a result, we believe that the popular market indexes will readily exceed their all time highs achieved in October 2007 over the next 12-18 months.

The all time closing high in the S&P 500 was 1549. The all time closing high for the Dow Industrials was 13,930. Intra-day peaks are somewhat higher –about 14200 for the DJIA and 1576 for the S&P 500. Enactment of proposed tax legislation can only strengthen the outlook for the economy and corporate profits. A more positive attitude or a less anti business posture by the Administration toward business would further enhance the economic outlook. Incremental business in a more buoyant economy can have a profound impact on corporate profitability. Corporate profits are already at an all time high at an annual basis in the third quarter.

The amount of cash being held by Consumers, $ 8 Trillion , and Corporations, $2 Trillion, has the possibility of additionally helping the economy going forward as they can become more comfortable spending as a result of the prospects of Gridlock. There should be less uncertainty going into 2011 now that the Democrats have been somewhat neutralized with the Republicans controlling the House. Gridlock, as we began mentioning in July/August of this year, achieved thus far what we expected; stopping a one sided out of control political system lead by Obama and the Democratic House and Senate. This is another positive for the markets.

We continue to be very bullish, reaffirmed after the 15% April-August 2010 market correction to around Dow 9900. Investors should remain fully invested..The investment outlook is bright.


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Category: Economics, Markets and Trading