-- Fed can't raise rates with mortgage resets (peak end 2011) looming and Commercial RE problems.
-- For the next year. Buy the dips in Gold and SPX.
-There will be dips. Buy only below 1040 SPX. Short at 1120-1140 at ST overbought SPX.
-Rangebound for 1 year.
-Look at Soybeans.
Will there be dips? What's the floor? Is there a floor?
Yes, there is a floor. At zero interest rates, I don't want to buy bonds. That means that there is a floor under risky assets like commodities, Gold and stocks. They're the only game in town. As soon as they start to go down, people will buy.
China has already declared that it will buy Gold at the rising trend line. This means Gold is a buy anywhere close to $1100. Buy 4-6 month call options and sell the rips will near-term calls.
Although the fed continues a zero rate policy through 2010, we will increasingly hear noise: fears of the fed raising. This is all it will be: "fears." These will drive the $ up and will be buying opportunities in stocks, commodities and gold.
People will buy the dips until they can't any more. Here's the issue: If interest rates stay zero, there will be liquidity that can't go anywhere except into stocks and commodities -- not into bonds, for instance -- and we will get a huge rise in the stock market led by commodities and gold stocks.
Short-run we may have more correction, but I believe we will stay range-bound. Problem for bulls is that Russell is really tired now. Profit taking by institutions may happen now, but I doubt that we will drop below 1020 or 1000 SPX at the lowest. If something extreme happens and we break that, there is a big floor at the 900-950 level.
Long-term we have begun a 40-year bull market.
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