Babylon...
I think there are too many unknowns facing us for me to make such a prediction. What happens with Iraq (which will begin soon), Korea, Venezuela, Brazil, Argentina, and Japan are just a few of the variables that will affect the outcome of the coming months, not to mention what I continue to see as the biggest uncertainty of all - the actions of the Fed/PPT/ESF.
I believe the background news is a bit less muddled, and quite negative for the markets. The economy is slower than most currently believe, and is continuing to deteriorate. I look for that trend to continue and for the Fed to be unsuccessful in reflating the economy to stave off a recession, which will be upon us by the end of the first quarter. I continue to believe that the recession will be global and will take a long time to recover from, with unemployment continuing to rise in Japan, Europe, and the US (I look for US unemployment to get well over 7% this year.)
Real profits will continue to decline and valuations will sooner or later begin to reflect reality as the rampant optimism currently holding the markets up will collapse without active Fed/PPT/EFS intervention. I look for the primary indices (DJ, NAZ, S&P, and SOX) to be sliced by 40-60% before the end of the bear, but I tend to doubt the bear will end this year. My best guess for this year would be a drop of 25-40% with the DJ suffering the least damage. Most of the damage this year should come in the first half, but I do not look for a sharp recovery after that - no "v" bottom.
The $USD will continue to decline (that seems to be the unofficial policy of the Treasury/Fed) and gold will continue to rise - I believe gold will easily top $400 before the year is out.
As for risks causing accelerated downside action - I have serious concerns that Iraq will not go as well as most folks think, with a lot of different possibilities for bad news there and that could be very bad news for the markets. The same is true for a potential financial collapse in Japan, which I view as very possible. Other nations, like Korea and even China, may well try to take advantage of our spreading ourselves too thin, so that could also be a problem.
For the upside "risks", the biggest is for continued aggressive direct intervention by the Fed/PPT/ESF, but I have serious doubts as to how effective that could be for any extended period. The unexpected overthrow/abdication/assassination of Saddam would give a sharp rally, but I think it would be short lived.
All in all, I remain bearish, primarily because of fundamentals (including excessively high valuations), but for technical reasons also - Unlike Zeev, I do not think we ever made anything close to a satisfactory bottom, with the lows of both 7/24 and 10/10 being artificially induced, as well as the ensuing rallies. They both gave false hope for the bulls, and probably prolonged the bear.
Just my opinions, though.
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