I’m back from my vacation from my financial musings. When I last wrote on February 12, 2016, the Dow Jones Industrial Average (DJIA) was 15,904.43 and WTI traded at $28.84. I felt that stocks were going to trend side ways to down as the Street still hadn’t fully accepted what most Americans knew: the economy is not very healthy even though the Street thinks otherwise.
On March 21, 2016, the DJIA closed at 17,623.87 and WTI traded at $41.52, or a gain of 10.8% and 44.0%, respectively, from February 12, 2016. That’s a bigger turnaround than yesterday’s Northern Iowa vs Oklahoma University NCAA basketball tournament game, where Oklahoma overcame a 12 point deficit with 44 seconds remaining in regulation to force overtime, and ultimately won in the second overtime. Like “Public Enemy” rapped: Don’t believe the hype. I still have a negative outlook for the DJIA as I still don’t believe the U.S. economy, and definitely not the World economy, is humming along.
My outlook is that the DJIA will close below 17K in the next few months and close around 16.5K as the outlook on earnings come in negative against the backdrop of a shambling world economy. That is a 6.4% drop from the close on March 21, 2016.