You can see where the market has gone relative to where the forecasts are for 2015.
If we get a red-year, it looks like a touch under 1700 is possible.
Tim 9:45AM EST 12/3/2014
The bullish and bearish factors that drive the US Stock Market:
1. Bullish as Foreign Investors flooding into the US Dollar (Negative rates in Europe driving Euros into Dollars to buy US Treasury Obligations)
2. Central Bank easing globally (especially BOJ buying equities to drive up stock prices in Japan)
3. Fed Tapering didn’t hurt stock prices
4. Low Oil Prices and low inflation globally due to low capacity utilization
5. Companies buying back shares - (Example: The S&P500 has 95% of profits going towards buying back stock last year)
6. High cash balances in corporations and very high and rising debt levels at low interest rates.
1. Strong US Dollar weakens earnings from overseas operations. S&P500 has over 50% of earnings from outside US, therefore it will be a drag on earnings with the 10% gain in the dollar.
2. Margin Accounts are the most extreme level of bullish sentiment in 40 years of data = extreme caution
3. Volatility is at extremely low levels revealing complacency by US Investors and a high level of economic certainty.
4. China’s engineered economy has been weakening and revealing a potential credit bubble.
5. Junk bonds are on their lows and pointing to smart money selling and that debt is building up at unsustainable rates.
6. Earnings are at high multiples relative to very low interest rates. If rates go up, P/E ratios will fall.
7. Stock buybacks are now greater than earnings in the last quarter, the first time since 2009.
more to follow...
This isn't a complete list, just what is on top of my mind right now.