Wall Street Sector Selector

Major stock market indexes continued to meander between significant support and resistance levels and this, of course, can’t go on forever. Expect a breakout soon, possibly as early as this week, as we reach the end of the quarter and half year mark. We continue to see significant risk to the downside in most ETF asset classes and believe that we are in a significant stock market correction within what is still a longer term uptrend, but an uptrend that faces growing threats on a daily basis.

Jeffrey A. Hirsch, Editor-in-Chief of the bestselling Stock Trader’s Almanac, discusses his stunning forecast of Dow 38,820. In this interview with Wall Street Sector Selector, Jeff explains his detailed research of market and historical cycles that point to the possibility of another super boom and details how you can prepare for what could be another historic bull market. John Nyaradi: Hi everyone, I’m John Nyaradi, publisher of Wall Street Sector Selector, a financial media site specializing in exchange traded funds, global markets, and economic analysis. Today, I’m really pleased to welcome our special guest, Jeffrey Hirsch. Jeff, welcome to Wall Street Sector Selector. Jeffrey Hirsch: Hey John, thanks for having me. John Nyaradi: Great to hear your voice again. Jeff is president of the Hirsch Organization and editor-in-chief of Stock Traders Almanac. He appears frequently on CNBC, CNN, Bloomberg, Fox News, and many other national and international media outlets. Now, Jeff is author of what I think is sure to be a new...

There is no denying that the emerging world — especially China, India, and Brazil — has had a nice growth spurt. And there are convincing reasons to expect them to continue their long-term growth stories: Favorable demographics and a shift towards more market-oriented policies. However, these long-term growth drivers do not immunize emerging economies from the business cycle … the ebb and flow of booms and recessions. The financial system and economic crisis of 2007-2009 was followed by the largest monetary and fiscal stimulus program ever. Not just in the U.S., but on a global scale. And with more or less every government on the planet doing the same thing at the same time, the results should also look quite similar. Restrictive Monetary PolicyLeads to Declining Stock Markets The short-term growth effects of these policies were especially strong in emerging economies. Their stock markets made a roaring comeback — but so have inflationary pressures. Hence officials have started to implement restrictive monetary policy measures. They’re...

Fantasy or comedy? I couldn’t decide which way to label the Obama budget, so I went with both. The bottom line is that the Obama administration has brought forth the most unbelievable revenue increase that I have ever seen proposed in a budget, a whopping 65% increase in revenues in just four years, which will – miracle of miracles – drop the deficit as a percent of GDP from nearly 11% to just 3.2% over those same four years. The only problem with this scenario is that it stands virtually no chance of actually happening. Revenue will be far lower than projected and the deficit correspondingly higher. One of my abilities is spotting bogus numbers quickly, and another is to make reasonably accurate projections without a staff of hundreds. For example, in 2009 I called for the Social Security fund to soon begin dipping into negative territory when the CBO was clinging to the illusion that 2017 was the ‘below zero’ date. Turns...

Bonds were crushed today while equity markets moved higher today in response to better than expected news on the employment front with the ADP December index showing a gain of 279,000 versus 92,000 previously and the December ISM at 57.1 versus 55 prior.   The FOMC meeting showed the Fed sticking to their QE2 plans while world food prices spiked to a record high and now stand at levels that triggered riots in the emerging world in 2008.   Interest continued their recent rise and the dolllar strengthened, causing an ongoing selloff in precious metals and commodities.   The new Congress began their work and the discussion is already turning to the Federal debt ceiling and how/when/how much to raise/not raise it.   Daily Moves for Major ETFs: Dow Jones Industrials: (NYSEArca: DIA) +0.34% Russell 2000: (NYSEArca: IWM)                  +1.17% NASDAQ 100: (NasdaqGM: QQQQ)               +0.86% S&P 500 Index: (NYSEArca: SPY)                +0.50% MSCI Emerging Markets:(NYSEArca: EEM) -0.25% MSCI China (NYSEArca: FXI)                            +0.08% Gold (NYSEArca: GLD)                                          -0.28% 7-10 Year Treasuries: (NYSEArca: IEF)        -1.08% 20+ Year Treasuries: (NYSEArca: TLT)         -2.20% VIX                                                                                 -2.07% U.S.  Dollar (NYSE:Arca: UUP                             +1.01%   The major indexes remain overvalued and...