- GS 1200 (1300 in a year)
- Wells fargo 1250-1300 (averaged to 1275)
- credit suisse 1270 (1340 for 2012)
- morgan stanley 1238
- BofA-Merrill Lynch ?? (1350 for 2012 end)
- JPM 1475
- Barclays 1420
- Blackrock 1350 (possibly revised lower recently)
- citigroup 1325
- oppenheimer 1325 (held all year long)
- HSBC, Deutsche bank, UBS ???
Removing extremes of JPM, barclays and GS, the average of rest = 1297. As you can see from the charts, market is in coiling phase, as it awaits news from europe. It could break in either direction, but it would take serious news to break to the downside hard. Based on the above facts, and my own analysis, my conclusion is that market will close the year at 1248 or better on the spx futures, as high probability (70%). Even though serious risk remains, as discussed in weekend market commentary, with proper risk management strategy, it is possible to build a bullish position for 2012 january earnings season (and beyond).
We had 2 days of Market hiccups, with about 28 point ES swings between my weekend analysis numbers each day. (1271-43, 1234-62 at closing of tuesday). Market is trading with a strong support at 1214 on the ES. News out of europe needs to be monitored everyday, since a breakup of EU is on the table and a crash is possible, any given day. I assume that atleast 50% of the risks are already factored into market prices. All it would take is a piece of news from europe, given the high risk fundamentals. But, one must take risk, to get the reward. Keeping cash in portfolio does not get us anywhere, given the intrest rates. I see more volatility in bond market lately compared to equities. So, for a long term portfolio, equities offer better value. My plan calls for additions to my long term portfolio at equally spaced intervals until the strong support. This means, i will add more longs in november when ES reaches 1214, 1224, 1234 with a stop loss at 1212 area. The target for this trade is a minimum of 1248 ES, with a high probability to reach the consensus estimates of the institutions, by january earnings season. I have to mention that i see 1214 ES as a low probability (20%) for November.
Meanwhile, my swing/day trading strategy remains the same - buying the green zone and selling the cyan resistance. Volatility is a double edged sword, rewarding those who have the right analysis, and punishing those who dont have the right analysis (like JPM :-)
1 comment:
As you probably have guessed from my following blogs, i have abondoned the desire to build a long term portfolio, after getting out with a bit of losses at 1224 within matter of days. I see the risks associated with a EU breakup and euro collapse as too much of a risk, in the months ahead. Given that all the 3 primary drivers have turned negative, there is little incentive to take risk in this volatile market, unless i see attractive valuations following another decline in the months ahead. 1200+ year end is not attractive enough to build a portfolio, given the risks ahead.
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