We did it once before in 2007, we can do it again! The countdown has begun to the next bear market, a 10% to 20% correction. The Dow reached an all-time high on August 15, 2016 of 18,723. Since then it has not breached that resistance level. A 10% correction from this resistance level would bring the Dow down to 16,851 and a correction of 20% would bring the Dow down to 14,978. Friends, I do not think we will experience a correction that will breach the 52-week low of 15,451. It may breach this support level if the interest rate curve inverts which portends a recession in which case the Dow may lose 40-60% of its value.
I just don’t see it yet folks, no matter what the gloom and doomers say. The interest rate curve is not flattening, the economy is sluggish and the Feds will not soon raise interest rates. But even if the Feds raise the interest rate by 100 basis points right now, it is still sustainable in this current economic climate and it will not cause a negative yield curve.
Standby folks. Those who made a lot of money in 2009 just by following my posts, will do it again when the next recession hits. Meanwhile, be happy to be earning 4-8% with your money invested in VTSAX and other S&P 500 Index funds just like many other investors. When the bear market that follows a recession hits, that is when we will make our real money.
Follow this blog and we will keep monitoring economic indicators that may cause the breach of the resistance and support levels in the Dow, S&P and NASDAQ.