Jon Markman
Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com.
Every couple of months, the author of the SuperModels column answers readers who write in to ask questions with the cry, "Hey Modelman!" Hey Modelman: What are you smoking? I am surprised you are telling people to expect new highs in the Dow Jones Industrials (in 19 Stocks for a Dow Peak). Isn't it more likely that the Dow will bump up against its old high and be repelled as it was throughout the 1970s? -- M.C. Jon Markman: You may be right. That column was probably not my finest moment. It published on the exact day [May 10] the Dow began to tank. I think financial journalists in good standing are allowed a mulligan now and then, don't you? To make up for it, I checked in with my favorite timers this week (before Wednesday's nasty selloff): Veteran tape reader Stan Weinstein of Global Trend Alert, Paul Desmond of Lowry's Reports, Bob Drach of Drach Market Report and Tom McClellan of McClellan Market Report. Here's the two-minute version of their views:
- Weinstein expects a minor rebound from this week's lows, but says the highs of the cycle have been made and that a "baby bear market" is commencing. He thinks the Nasdaq may rise 50 to 100 points in the next week or two, but then sink as low as 1,900 to 2,000 by the fall. After that, he expects a solid rebound into 2007.
- Desmond has been saying for some time that the current bull market is very, very long in the tooth. He is looking for a recommencement of the "secular," or long-term, bear market that began in 2000 and was interrupted by a "cyclical," or intermediate-term, bull phase that started in 2002.
- Drach is heavily negative on the broad market and has been nearly all year. He sees a great disparity between high-quality and low-quality stocks and does not expect to give an all-clear signal for several weeks, if not months. Drach has an especially impressive record of calling bottoms, so when he gives the whistle, I will let you know.
- McClellan, who I think is the best intermediate-term stock-market timer going these days, is actually a lot less bearish than the rest. He called for the mid-May weakness a few weeks ago as the market was making highs, and now believes the selling will end some time next week. His cycle work suggests the market will then advance to new highs by the end of June, and then "chop sideways" through the summer into a soft spot, but not a crash, in the fall. His most interesting forecast is for crude oil and energy stocks to bottom in June and then advance through the end of the year, culminating in $100-a-barrel oil and $4-per-gallon gasoline.
-- D.E., Wisconsin. Markman: The mysterious Mr. P -- an expert on market cycles -- was bullish for a year through the end of April, but he has since turned seriously bearish. For those of you just tuning in for the first time, he is the veteran research director of a major global macro hedge fund on the East Coast who shares his views with me from time to time. Mr. P has seen and done everything in the markets, from risk-management to sales management, from bonds and equities to currencies and swaps, from New Jersey to Switzerland and Taiwan. On behalf of his partners, he rarely rests -- sleeping just a few hours a day in the early morning -- as he scans the horizon of time and geography for events in far-off places that might help or harm their positions. In a normal 14-hour period, he will confer with his firm's and rivals' traders in Tokyo and London; read, analyze and distribute news headlines to peers; consult with professors, journalists, miners, mathematicians and farmers; and book travel to Iowa or Brazil, if necessary, to check on the soybean crop first-hand.
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