US Dollar Index and the S&P 500 are Going to get Creamed
What was the major trade since the early 80's? Long bonds to 2003 and stocks to 2000. Then long bonds again from 2007 to today and long stocks since 2009. Simple.
You only need to make a few investment decisions in your life. I believe the next major move is shorting the US Dollar Index in a few months and early 2016 at the latest short the S&P 500.
I believe the US Dollar Index will not go above 115. So this is a taunt to Wall Street. I dare you to try to make it go above 115. I don't think you have the power. You will fail. So pick your entry point to short at 105, 110 or 115 but that will be the end of it. The target is at least 65 by the end of this decade. A new low is in order because nobody prints like USA.
The S&P 500 will top out somewhere between 2200-2500 by 2016 at the latest. Short it at say 2400 late this year or 2300 if you are not as greedy for your entry point. It will go below 1000 because reported earnings will drop below $80...they are already dropping now from $28 reported earnings per quarter to $22. At a PE bottom of 12x that's 960. The book value needs to come down which is around 700. So 1000 / 700 = 1.5x still a fairly hefty price to book at the coming bottom. You could get some negative quarters also making the book value go down.
We all know earnings can get really creamed even below $50. $50 x 12 = 600. If Japan's Nikkei found a new bottom of 8000 twenty-five years later surely the S&P 500 can participate in imploding the Ponzi scheme.
The bursting of the bubble from 2000-2003 and again 2007-2009 together make the shortest bear market in American history just 8 years. Though we might not go below 666 in 2009, I think we will.
It is difficult to believe what I am saying unless you can feel the catalyst. Several catalysts exist: housing drops again, earnings collapse because of the rising dollar, string of negative GDP quarters depressing people, car loan delinquencies, student loan constricting, and major derivative trades go bad in a highly leveraged gambling game.