DOW 6800, S&P 720, NASDAQ 1310

These are the prices that I'm looking for each index to pierce before we hit true bottom. Actual fundamentals point to much lower prices over the course of time but given that we are entering a new economy where the rules that everyone has to abide by have changed, we can no longer analyze, examine and interpret the actual fundamentals of a company as we once did. This is a market that is being handled by computer models that artificially interpret the markets differently and as an end result, we have to modify our understanding and knowledge of the markets to combat the new market. Here are the three main reason why I think we are close to a bottom time wise:

1) Inflation- You will eventually see DOW 14K again(5-10 years). However, DOW 14K will not be the same in nominal terms($Y) as it once was simply because each dollar that you now hold will be worth nearly $.10 on the dollar then. Inflation will cause market prices to rise but this does not mean the actual value of assets will increase. Many will feel richer but most people will continue to be as impoverished or even more so as they are today(making them endentured to the system for ever). What will change is market sentiment, nothing else. The overall well being will improve economic conditions but many will fail to recognize that the current problems that we face today, will never evade us.

2) Techniclas(elite market tool)- 50% fib on the DOW is in and around 7000. Pools of capital will come to sustain that level at all costs. You will see shorts and sellers pierce through DOW 7000 but the markets should plateau around 7000 before the next bullish leg commences(much, much more gradual in its ascent, your looking at 3%-4% increase per year. Not adjusted for inflation).

3) Government Inteference- The government is setting its precedents of a New World Order. If you dont know what they pursue, you better look for your own sources.
(Let me put it this way, they want people to forget about this collpase 5 years from now and start the bubble all over again).

All comments and opinions are welcome.

Crazed98,

I dont expect the economy to show any signs of steady improvement until the end of next year(2010). This crisis is a completely different animal that no one understands. GDP will probably come in positive by the first quarter of 2010 but this will not mean that we will have a sound economy by any means. You still have to look at worker producitvity, consume sentiment, avg hourly earnings, consumer spending, business spending, unemployment, underemployment, etc to try to get a feeling on how well the economy will actually preform.

Next quarter's GDP will come at or below 5%. It will not be pretty but it will come in line or a tad lower than expectiations(if you really take into account the entire frictional and strucutral aggragate of unemployment, you have unemployment over 10%).

On any rate, I dont think the economy will improve soon but I do believe the market will discount this improvement in the economy 6 months in advance.

I'm glad you posted the chart simonyadig. As you clearly pointed out, this graph clearly depicts the biggest heist in history. There is no two ways about it(numbers don't lie, 1+1=2). The recent tumble in the stock market is only the culmination of a colossal move that has still evaded many people to this very day.

Five quick points that I want to make about that chart:

1) The recent cyclical bull run that we saw in 2003 was a mere mirage of reality. During this 6 year period we've seen real purchasing power diminish as priced in gold(real/tangible value)(ounces)/$ and assets have actually lost empirical value over the course of time. People didn't acknowledge this fact until late last year when it all imploded. They were the bubble.

2) This divergence between the dollar and gold is foreshadowing the demise of the USD. It showing how weak demand truly will be(leading indicator much like bonds).

3) As Simon pointed out, the market looks extremely attractive to the average investor right now if priced in dollars. This is why I've said that we still have to see more people getting involved in the market before we see the next and final hit. People are starting to buy into hope as it pertains to the stimulus package, President Obama, etc.

4) Look at volume. You would notice that the grand majoirty of the volume in the past 50 years has come in the last 6 years. This is the period where the grand majority of wealth has been transferred no only between hands but between fiat currency into hard commodities. In other words, the past 100 years worth of wealth creation around the world has been transferred in just 6 years. Look at real incomes as priced in gold and you'll see a similar trend.

5) This move into gold is just the prelude to the next bubble.