Many false assumptions
Either make purely TA argument for higher prices (which I could see) or fundamental argument. But try to be critical. As for fundamental arguments, there is absolute none for the next year. In fact, historical fundamentals argue for total collapse. The first thing you have to learn that you will never get the truth of the economic situation from anyone remotely connected to the government or Wall Street. At the end of the day, they are in business of either trying to make the public feel good about themselves (in order to stay in power) or selling you something (in order to earn their bonuses).
"1. Commodities finally cracking down - they had a put a BIG cap on stocks to move up."
Commodities topping will mean that the hot money will seek the security of fundamentals. The US stock market is not that. Stocks are not cheap by any means. They never got cheap by any historical measure fundamental measure. Bear markets destroy value. They kill the euphoria that was created by printing money. The sector rotations works brilliantly until there is a realisation than none of it actually presents any value. I expect a USD crisis and long stock market slump. It will happen unless things are really different this time. But then again they have never been different ever before.
What we are seeing is the destruction of the speculative bubble in commodities and real estate. Btw. even big caps are not really moving up, instead few selected ones that have high influence on the index values are moving.
"2. Interest rate pause and may lower rates next year."
You do know that 8 out of the last 10 times when the interest rate cycle hikes stopped, the markets fell by 10% or more within the next 6 months. I expect the situation to be much worse this time as I do not expect the inflation to be under control. Many people have completely forgotten what inflation is fundamentally. It is not CPI or PPI. I recommend going back to the foundations.
In the fundamental analysis area in the media, there is way too much searching for new theories to explain why we will not follow the path of the history and why internet bubble was not just that and why US dollar printing presses running out of control should not cause world wide consequences. Remember, no recession has EVER been forecasted by the official organs as that is BAD. Can you imagine a treasury sectary coming out and saying that the economy will fall into a recessions? But it does not mean that it does not happen. Laws of physics have not changed and neither have the laws of economy. One of them is that the longer you inflate the bubble, the more painful the fall out. Yes, you can postpone it, but you cannot avoid it.
I think the two most important developments recently times are the bank of Japan stopping (btw. May I ask you to check how US markets reacted the last few times when they did that…..) the quantitative easing and China reigning in liquidity in their markets. I'm afraid my feeling about the future of US markets is that it will follow the painful path that Japan took. Chinese central bank actual sounds much more rational and trying to counter the overheated economy with actions instead of just words. Japan has been the source of cheap money for, what, a couple of decades now. Imagine that all those borrowers actually have to pay it back now! It's a perfect storm.
"3. Vista is being compared to Win 95 and application/technology wave that followed - Marked improvement over predecessor (Win XP / Win 3.1)."
That's called hype not bottom line. First of all, technically, it might be a flop and I cannot see any sensible business upgrading until at least service pack 1. And there is a real question whether MSFT will be forced to actually delay the release once more.
Besides, MSFT is just one stock, not the market.
"4. Capital/Technology spending by Businesses with Vista"
Another spin, not a fact. There is a move away from closed systems. Just check the state of Massachusetts.
"5. Boomer spending continues to be strong"
And they will be caching their savings and pension plans.
"6. Global expansion {Recovery in Europe (Germany) & Japan and expansion in China, India}"
And you think they will help US? Both UK and US have service economies. They "manufacture" intangibles. Euro area has positive balance of payments while both UK and US have negative. Their economies have done well on the hype and Enron accounting. It will never last forever.
