The bear market sucker's rally is losing its steam.
I have been predicting for a while that the most recent bear market sucker's rally would lose its steam and, like the previous bear market rallies in the last 18 months, U.S. and global equities prices would head again toward new lows. Here's why....
...With my forecast of 2009 earnings per share for S&P 500 firms being in the $50 to $60 range, and with price-earnings ratios likely to be in the 10 to 12 range, given a severe global recession, the S&P 500 could bottom at some point in 2009, at best at a level of 720 and, in a worse scenario, as low as 500 or 600.
So, the worst is indeed still ahead of us.
The S&P 500 closed today at 827.50.
See also: last week's link via FT Alphaville "Roubini: Let me count the ways it was a sucker’s rally"