Market Chasers

My Outlook and Bold Predictions for 2009: December 28th, 2008

December 29, 2008 – 12:56 am

Well folks, it looks like 2008 is coming to a close in a few short days and we will give birth to a new year. Some can view this as a fresh start and to set goals with their new years resolutions list, but I have a very different and very pessimistic aura surrounding me. Some may even call me Lucifer himself. As you read this, step back and recollect the year we have experienced. It has been almost catastrophic hasn’t it? Deep in the inner thoughts of your mind, you dwell on the future and what it may bring to the lights of you and your family.

MY OUTLOOK FOR 2009

My outlook for 2009 is pretty dour. For those of you who read this and find my thinking somewhat of a traitor to global free market capitalism or feel that it is not in your best interest to hear the truth, the back button is always on your browser and please, never come back to my website ever again. If you are too oblivious to realize the truth or you have your head stuck so far up your ass that it would take the jaws of life to pry you out, then well….that is why your portfolio is down 40+ percent this year. Trust me folks, there is alot of downside air left to go. Let me remind you of the quote I wrote a week or so ago of how 2009 will play out:

“You bulls will get your legs cut out from under you. Your 401ks and IRAs will get cut like a hot knife through butter. The funds in your IRA and 401ks will flow into my portfolio like Niagara mother fucking Falls when I short sell your shares. I am the hunter, you are my prey. “

So far, many of you have heard of the monstrous bear market rally that every single financial analyst or CNBC correspondent preachs about, something I am still confident will happen. Take a look at this chart below. The most radical bears in the market have deemed the move from the 08 lows to the first week of December as the huge bear market rally. Though this move has been powerful, it has been nothing compared to the overall picture: we are still 40% off last year’s highs.

In the chart below, we are experiencing some resistance at the 50 day moving average line. In order for us to move higher, we will need to break this before we see a move to the next fibonacci retracement value, highlighted in green. If the S&P were to somehow break that, we could easily see a move up to the next fibonacci retracement value, highlighted in orange. For you idiots who believe that we will retrace up to the 78.6% or even the 100% fibonacci retracement value, you may want to check your refrigerator, because some freon might have escaped and I heard breathing that in was not in the best interest of your health. The simple reason this WILL NOT happen is the price to earnings multiple. Owning a company with a 50 dollar share value and a five dollar forward earnings forecast is a HELL of alot different than owning the same company at a 50 dollar share value and a one dollar forward earnings forecast. If the S&P were to somehow retrace to the 100% value, I will shut down this blog and quit trading. One other reason is that the 200 and 500 day moving averages will catch up to the fibonacci retracement lines, providing even more Herculean resistance.

Once forward momentum runs out, the fall we will experience which will much faster then what you saw in 2008. We need a catalyst (I will talk about this in my bold predictions of ’09), but think about it this way:

• Pretend that the Mongols were preparing the reinvade China and stood infront of the Great Wall of China. For months and months the Chinese emperor was ruthless and cunning, razing Mongol villages and forces throughout Mongolia (selloff of 2008). After a certain amount of time the Mongols decide to bear arms and attack the Chinese but the Great Wall was the only thing standing between them. They muster up courage and begin a ruthless assault on all patrols around the Great Wall, while beheaded messengers and convoys (huge bear market rally as it moves up). The Mongols bring battering rams, trebuchets and homemade explosives to the great wall, attempting to take the wall down. In the end, they realize that their technology is inferior. Their cavalry units break, Genghis Khan is captured and the war ends in terrible defeat. The Chinese emperor decides to punish the Mongols and burns every village, eradicates the Mongol race and takes over the entire Mongol empire (catastrophic sell off of 2009)

The pictures below also tell a grim story. The S&P in in a double top formation that was broken when the 01-02 bear market lows were broken, but the market somehow found its legging. The only reason I believe this happened was due to the severe and unrelenting speed at which the sell off in 2008 played out. I have layed out two area of support, the 600ish level (which is where I think the S&P will bottom out) and 450ish, which is another huge area of support.

The second chart is the BIG picture folks. This is the chart of the S&P based on Great Depression lows and 2007 bull market highs. Does anyone happen to notice where the 61.8% “Golden Value” Fibonacci retracement value is? Right at 604, which is equivalent to about 6000-6500 on the Dow Jones Industrial Average. There is a slight chance we could see 450 S&P, which would put even more strain on an already distraught U.S economy.

MY TEN BOLD PREDICTIONS FOR 2009

*Drumroll*

1. 600-625 S&P 500 average, 6000-6500 Dow Jones average before 12/31/09.
2. The assassination of a major political or economic figure with direct ties to global economic markets, with the hit coming out of Russia or the Middle East. I pray it is not Barack Obama, because that would cause worldwide chaos and possibly Marshall Law. (If a terrorist attack happens to a landmark with the equivalence of Big Ben or the World Trade Center, I get 1/2 credit)
3. The internal collapse of a world nation, most likely a smaller european country.
4. The Bankruptcy of Citi Group (C)
5. New York Yankees winning the World Series
6. Ford will be the only one of the big three not to declare chapter 11
7. The Biotech Spyder Select ETF (XBI) ending the year higher than value at the close of the last trading day of 2008.
8. The Houston Rockets winning the NBA Championship
9. Gold dropping to below 500 an ounce
10. Unemployment will be greater than 12%

I will be placing this list in the “Predictions for 2009″ page. I will check these off if they happen. Lets see how many I get correct

Thanks for reading

-Justin Moon, Senior writer for Marketchasers.com