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TheStreet Open House

Stocks Will Correct by 10% to 15% in 2014 Even If New Highs Occur First

NEW YORK (TheStreet) -- On Thursday I ran my proprietary analytics for the end of 2013 assuming that the Dec. 31 closes would equate to the closes on Wednesday after the huge stock market gains that followed the FOMC decision to begin tapering of quantitative easing in January. Included in today's post are buy-and-trade parameters for SPDR Dow Jones Industrial Average  (DIA), Nasdaq 100 Shares (QQQ) and the S&P 500 SPDRS (SPY). But first let's focus on Treasury yields, gold, crude oil and the euro vs. the dollar.

The yield on the Treasury 10-year note (2.883% on Wednesday) will have a monthly value level at 3.590% with quarterly and annual risky levels at 2.565% and 2.231%. The key to preventing higher yields will be a weekly close below 2.565%.

The yield on the Treasury 30-year bond (3.898% on Wednesday) will have a monthly value level at 4.475% with a quarterly pivot at 3.771% and annual risky level at 3.253%. The key to preventing higher yields will be a weekly close below 3.771%.

Comex Gold ($1,219.5 on Wednesday) will begin 2014 with a monthly value level at $1,119.6 with a quarterly risky level at $1,392.5. The gold bubble has popped, but there should be buy-and-trade opportunities on weakness to value levels.

Nymex Crude Oil ($97.91 on Wednesday) will begin 2014 with a monthly pivot at $98.21 without a value level. There will be two zones of risky levels; A semiannual risky level at $109.84 and quarterly and annual risky levels at $114.36 and $115.23. Strength in oil depends upon demand which depends upon a Main Street economic recovery.

Euro vs. dollar (1.3692 on Wednesday) will begin 2014 with annual, quarterly and monthly pivots at 1.3368, 1.3454 and 1.3631. Semiannual value levels are at 1.2628 and 1.2189 with an annual risky level at 1.5484.

Dow Industrials (16,168 on Wednesday) will have an annual value level at 14,653 with semiannual and monthly pivots at 16,064 and 16,145 and quarterly and semiannual risky levels at 16,580 and 16,769. In this scenario the upside is 3.6% with a downside potential of 9.4%.

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