My friend John, a professional securities trader, has recently become bearish enough to put a toe into shorting the market, for near term. He views the market movements after QE1, QE2, different than current after QE3. The market movement difference now has encouraged him to take a bearish stance on the market.
If you read the news, there is plenty of bearish news to back up this view. Fedex shipping is down, which can be compared to GDP forecasting, California sales tax revenue declined 20% YOY in August, IMF chief warns of US financial issues in short, medium, and long term, Eurozone is seeing steepest contraction since 2009, Japan exports contract 3rd month in a row and China PMI contracts, Toronto home sales decline 64 percent (due to law change).
Pile on the Euro news with Greece, France, and Spain seeing Neo-Nazi fractions rising threatening those countries status quo.
Now lets look at the opposite view, there is plenty to find, but I am quoting the top two from my perspective. The Federal Reserve bank believes QE3 will help the US economy, as QE1 and QE2 did in the marketplace.
My favorite market watcher Gary of Smart Money tracker is calling for a "near term" bottom with market reversal. Gary isn't the sort to make super long term predictions like the year ahead, he watches cycles to see next move.
So what is next? A market fall of significance is always in the cards, especially if you look at history now or in the Great Depression. (currency wars occurred back then too) I am mixed, while I don't think in the year ahead we will see 30% market gains, it is possible the market finds a dead range of +10% and -10%. My inner voice tells me the market is very weak and going to implode, but then again, I have heard that voice a few times in the last few years.
A conservative stance is probably in order, and on any strength, I may continue to lighten to be nimble.