Mar 30, 2010

2nd Quarter Market Outlook

The prevailing economic outlook amongst individuals is obviously disconnected with the fundamentals of reality. This is a time to take some profits in equity markets, giving one an ample cash balance going forward should great opportunities arise. Don't get me wrong as there are still enormous bargains, but they are few and far between. 

2nd quarter forecast -I have a strong conviction many of these will play out, but the timing is an issue. The following is my forecast for the remainder of 2010.

  •  Oil will see a correction, potentially significant in the months ahead. While a long term bull oil has gone up almost in a straight line. Oil will retrace back to the $65-$70 range. I think it may be topping out sometime in April, if it hasn't already.
  • Significant correction in the DJIA - 8,500 - 9,200
  • Bond yields begin to rise rather substantially on an annualized basis in Q3-Q4 due to debt monetization.
  • This debt monetization will send precious metals soaring - 
    • 2010 Price Target Gold - $1,450-1,600/oz
    • 2010 Price Target Silver - $24/oz-$26/oz
  • More sovereign debt issues - either with Italy, Spain, Portugal 
  • A weakening GBP & EUR

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