do we have to retest the 6500 low or are we in a new bull market?
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By next year we should be over the 10 thousand mark. But to the get to 14 from now that should take us 24 to 36 months or more. Look at the moment your major large investment institutions are sitting on cash and are below their benchmarks, they have to invest. Secondly your financials are going to rally for the rest of the year simple because the banking stocks are far too undervalued. Remember as your banking sector heals their shares will sky rocket even if we may still be in a recession. Some of those shares are trading below half of their book value. Alot is cheap out there. So the financials will lead us to the 10 thou mark. But once there you will see us going down a little only to come back and remain around 9 and 10 for a while. And the reason for this is that the real economy will take longer to come out of the recession or even give any signs of coming out. Right now we are still trying to find the bottom. We think we are there. But the problem here in terms of the real economy is debt. There is too much debt in the economy. Families are going to have to go easy on spending and pay their debts. Now this is going to drag the economy as consumer spending makes up two thirds of the economy. Your unemployment rate is not about to turn around now. And then next year your should start seeing inflation going up. Again consumer will be under pressure. Cost of credit is going up. So your business may find it not so easy to get the capital they need. All of this indicates a very very slow recovery, which means to me very low or next to none earnings per share. So getting to 14 thou will not be easy.
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Things have changed significantly in the U S. It will take a while for the Dow to break 14k, but the keepers of the Dow do have special tools in their tool box to help it along. They will throw out the stocks that have not done well and replace them with stocks that are doing well. It is a trick they have used many times in the past with great success sometimes and at other times they have failed miserably. GM should be replaced very shortly. Maybe by PEP a worthwhile stock. C and BAC might not be long for this world either. There was a time when the DOW was replacing every company they could with financials. Now perhaps it is time to reverse the trend.
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do we have to retest the 6500 low or are we in a new bull market?
NO on BOTH counts. ANY answer is a guess. There has NEVER been a 15 year period in the history of Wall Street that did not show a net gain.
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I predict a near-term drop - maybe not to the March lows - because the recent runup cannot be sustained. 14,000? I wouldn't bet on it for at least five years and perhaps ten.
In your opinion, how many years do you think it will take for DOW to go back to 14K and over?
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