Financial Ramblings – February 8, 2016

Wait for it, wait for it, …

At the time of this article, the DJIA was at 15,896.18, down 308.79 or 1.91% from Friday’s close. Last week, on Monday, February 1st, I stated that the DJIA would close on Friday 5th, at 16,200; I was incorrect: it closed at 16,204.97. My powers of prediction didn’t apply to the Super Bowl as I thought Carolina would win 25-20, however, if I had bet the spread and taken Denver at +6, then I would have been correct.

I just don’t see the world economy improving. China’s GDP will be above 6.50%, which, according to the Wall Street Journal, is the slowest growth rate in 25 years.  The PHLX Semiconductor index is down as well, about 3.27%; it is just another indicator to use when gauging the relative strength of the economy. The semiconductor industry is notorious for these cyclical periods- it’s not as constant as Moore’s Law, but there is a fairly consistent pattern. The pattern was recognized by Bill McClean, an analyst at IC Insights Inc., Scottsdale, AZ, in an article published on December 8, 2000 in the EE Times:

The stage is set for the next slowdown. The downturn portion of an IC industry cycle is usually triggered by global economic recession, IC industry overcapacity, or IC inventory corrections. In 2001, the IC industry will be affected by all three ‘triggers.

Substitute tablets and phones for PC’s and it’s easy to see why I’m not too rosy on this upcoming year and part of next year. If you follow my posts you can see how correct I’ve been in my economic assumptions. I’m still sticking to my guns that the market has a way to drop in the next half year: 15,386.82


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I write about the stock market and predict where the market will be in the future based on my experience as a financial analyst (corporate finance) and reading of the tea leaves.

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