This Prediction Might Come True Tomorrow

I am looking through my '13 Outlier 2008 Predictions' and so far so good, and at a far quicker pace than I imagined on some of them. Part of #7 might be coming true tomorrow in fact.

After over 2.5 years of not suffering a down 2% day dating through early 2007, volatility in the stock market takes over as the theme of the year, 2% daily increases and drops become a weekly occurrence.

Check!

The market suffers its first 20% drop (from Oct 9, 2007 peak) in the first half of 2007 as consensus emerges that "a major slowdown" (which dared not be called a recession due to elections coming), is happening.

Let's see where we have to hit to get to this 20% prediction among all 4 major indexes

DJIA Oct 9th: 14,280 - 20% off = 11,424 (current 12,099)
S&P 500 Oct 9th: 1576 - 20% off = 1261 (current 1325)
NASDAQ (actually peaked a few weeks later @ 2861) - 20% off = 2289 (current 2340)
Russell 2000 Oct 9th: 856 - 20% off = 685 (current 673) check

Anyhow I expect a woolly day tomorrow short of any surprise interventions. Certainly a 4-5% down day on major indexes could be in store with individual names down far more than that. If history is a precedent (and it hasn't been lately) it would not be surprising if this did not mark a near term bottom and a tradeable low is (finally) created Tuesday or Wednesday. From which we should get a powerful move upward. (which should be sold within a few weeks, after CNBC returns to "the bottom was in, in mid January" coverage)

Remember how my #7 prediction ends ;)

The market ends the year only down 2.78% as economic based bloggers throughout the world wonder what it takes to make the market ever go down?

Allright that portion seems like a work of fiction now, but with the flood of foreign infusions that should be hitting our markets by summer as the US goes on blue light specials, let's see how it plays out. We are not even 1/12th of the way through the year, although it feels like 3 years...

So hold on to your crash helmet tomorrow and remember, traditionally through the emotional selloffs, come some great profit opportunities. Easy to say on paper, but certainly it is something one should experience as well. :)