Standard & Poors is projecting that S&P 500 earnings will be down 62% in the 4th quarter over the 4th quarter of 2007. Assuming no contraction or expansion in the P/E ratio, if we multiply the peaks in the Dow, SP500 and QQQQ by 0.38 we get the following downside targets:
Dow 5395
SP500 599
QQQQ 20.93
It is very interesting that these numbers are not far off several calculated targets using moving averages and fibonacci. Given time, fundamental and technical analysis can reach similar conclusions, although no analysts that I am familiar with in the public arena predicted this decline in earnings.
I will publish a chart tomorrow showing the squeeze signal in the Dow. No time tonight.
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