Updating and revising our financial markets forecasts (here and on our Financial Markets Predictions page):
US Stock Markets
As per our 3/23 update, US stocks peaked just 5 days later and has since entered a series of lower lows punctuated with short rallies. Its still to early to determine if a major top is in place but we wait and watch.
The downward move targets DJIA 17,721 (already achieved), 17460, 17,037 to potentially test the mid October lows at 15,855. (S&P500 2061 (already achieved), 2045, 1980 & the October lows at 1820).
It appears gold will bottom at or around the previous 11/07/15 low at US$1131 this coming week. If confirmed we can anticipate a resumption of the counter rally from the September 2011 highs at US$1920. Our target of US$1430-1440 remains in place.
The US dollar has rallied strongly in the last few months. The US$ may already peaked and begun a consolidation phase lasting many months. Specifically:
– US$/Yen: We are anticipating one more high to 124.50+/- before beginning a consolidation phase lasting months.
– Eur/USD: From here or slightly new lows (1.02-1.0495) we view the market has completed its move down and anticipate a major bounce. We anticipate a test of the 1.60 Eur/USD level.
– Aud/USD: anticipating marginal new lows below 0.7560 before a move back towards 0.9500.
Oil is continuing its consolidation phase before resuming its down move to our US$12/barrel target we first determined in 2011. Short term we view the market making equal lows (US$43.58) to slightly new lows before rallying back to continue its consolidation phase. Our upside focus is US$68.00 with an extreme case push to US$75.54.
US interest rates have the potential to also spike sharply in the near future. Using futures as our proxy a move on 10 year notes to 110 -115 in 2015 is very doable.
The potential for some markets to rally (gold, silver, oil, Euro, Au$ (US$ weakening) suggests inflationary pressures emerging in 2015 in the US. This is in line with our money supply analysis and Austrian Business Cycle Theory. Alternatively, a crisis in the next 6 months may cause markets to spike in response to some international political event. Several scenarios are potential: a Greek default and/or Grexit in the summer months, Ukraine/Russia troubles and China.