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Bullish trader Laszlo Birinyi, published his forecast for year end in Bloomberg News. While reducing his forecast for 2010, he still sees the S & P climb 17% to 1225 by year's end. His original prediction was that the S & P would reach 1325. On Thursday the S & P closed at 1047.22Birinyi bases his forecast on the fact that we've seen a 20% plus rally off the lows March 9, 2009, but have not had a 20% downward move that would give a sell signal. "He stated: "We continue to be optimistic and comfortably so, but also realistic and pragmatic."
His main reason for the bullish stance is that valuations already reflect the weakness in the economy. The growing pessimism does not mean that stock will fall.
The firm wrote: "There is significant difference between the stock market and the economy. While both may be housed in the same building, they live on different floors."
We must weigh this view against the Fed's recent moves to buy more treasuries with the proceed from existing investments. The Fed is decidedly worried about deflation and may take additional steps to shore up the economy.
Do you fall in the bullish or bearish camp?
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