The Gloom, Boom and Doom Report.

This post is prompted by several mails from those of you who should be studying for mid-terms and quizzes instead of asking about market direction.

1. In reference to my post on “it is all about China “from last week, here is a link to a story about the Gloom, Boom and Doom Report, from a well known China investor.  The story is all I got, the report is too expensive for me. His take is an S&P low below 1100, then a year-end rally and then a more meaningful decline.  I am seeing many versions of this expectation.  On that front, USO as a dirty proxy for oil is already at Spring 2009 levels. Many of the oil services stocks have got trashed for a week now and may just bounce soon.

2. For a fundamental take, estimated earnings for the SP500 are about 103. (Go to my web links page, click on data sources and follow the instructions to get this data). You may also remember another P/E graph from the site talking about market P/E’s typically ranging from 10 to over 20 historically. This would put the S&P p/E at about 11 at present and it may look cheap. That makes an important assumption, that the earnings forecasts are accurate. Analysts are taking them down already, and will do more of the same as earnings season unfolds ( I alluded to this in another post as well). So the emperor does have no clothes.

3. The technical take continues to be bleak as well, one of these days markets will open low (pretty soon me thinks) and take off on another bounce attempt. If history is any guide, this and the next few will be dead-cats for people to sell/short into. I am flat and happy but that is probably what I will do as well. Remember the line about history– it may not repeat itself but it often rhymes.