As I've stated ad nauseum lately, my view has been that we'd fall to a level very close to the February low (which we've done nicely now – – today was just about a perfect match) and then rally strongly to about 1150-1170, and then – – shazam! – – the plunge of the year.
What, some people ask, could possibly cause the market to move up now? Well, it hardly matters, but I suspect a variety of "good news" could do the trick, such as:
+ BP getting that horrible leak fixed;
+ A good jobs report next Friday;
+ A relaxing of tensions from Korea;
+ Things settling down in Europe;
+ The US dollar cooling down in value
I mean, you can fill in the blanks with whatever you want. But the "news pendulum" is probably going to swing toward the Good side for a bit, allowing the market to get some traction and some asset inflation for commodities, precious metals, oil, and equities.
What will stop the momentum and provide for an even greater fall? Well, the systemic rot we've all been talking about here for years. But, from time to time, there will be distractions from that rot, and it'll provide good shorting opportunities.
This is all conjecture, of course, but it aligns with my thinking about market direction that I've been laying out the past couple of weeks. Below is the latest Tim Knight prediction about the market's direction, based on his patent-pending WAG* system:
* Wild-Ass Guess