LONG S&P, DJIA, FTSE… SHORT TESCO, PLUS500
The 2,200 level on the S&P 500 will bring us to bubble levels, which is where we need to head to if we are going to see any “correction”. That certainly is the level that I will close my long, tap my fingers and see if we are going to go even higher… Even higher you say? Yes, even higher! This is what is taking place in my humble opinion, we are seeing a gradual transfer of equity wealth into the US from the rest of the world… so the bull market in the US could indeed escalate in 2016/17. It is simply a consolidation of wealth and centralization of financial power.
Meanwhile, the FTSE will indeed have to rise, as with US markets rising the disparity of value vis-avis the S&P would simply be too large for it not to. In plain English the FTSE would be just too cheap versus the DJIA and the S&P. As it is FTSE is some 20/25% cheaper than the DJIA… and since I am absolutely certain that we are heading to DJIA 20,000 by Christmas this year, the FTSE will simply have to rise just to keep pace. My FTSE target is 7,500 by Christmas at the very least.
Why DJIA 20,000 by Christmas? Well, look at what has been going on for the last few years… see a pattern? They always make big statements just before Christmas to give apple pie folks something to feel good about during the holidays. Telling one another how great their economy is doing with the DJIA and S&P as their reference point for checking how wealthy they are. In fact the very opposite is true: the worse things REALLY are, the higher stock markets tend to rise. Once interest rates start rising, which I strongly feel will not be at least until we have hit DJIA 20,000 (and maybe not even after that – in fact perhaps not even until 2018) then they will come to see the truth… which is why when this market falls it will be seismic! It will be as big as they come… it will be historic… the level of debt the western world is under is just unfathomable…
Now in all the bullishness I call/predict… it is odd that I would pick a short but Tesco (TSCO) is just asking for it. It is like shooting fish in a barrel. All the facts point to Tesco’s share price making its gradual journey to about £1.75ish, which is the most optimistic value I put on the company. I feel even with the inevitable rise of the FTSE TESCO will still fall. The company has lost its magic, has a massive debt burden and not much room to manoeuvre in terms of growing its business and profitability. Tesco has become some kind of discount store when it cannot actually afford to discount. With patience this is a big payer on the short side in my humble opinion.
PLUS500 (PLUS)… as per my last call it is weak and the recent announcement did not do much to boost confidence. I remain very negative on this firm and do not see any ray of sunshine, disregarding all the numbers and what they say. There is something really bad going on in this firm and most importantly it has now permanently lost the most important VALUE that it has in this business, and that is TRUST. I still think this is going down, as they say in some gangster movies.
Till next week
Andre
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