Proving or Disproving the ThesisEvery time I make a forecast or market call, I start with the presumption that I will be wrong. Then, I begin looking for signs that will validate or repudiate the call. So what would prove this market forecast call false? There are several ways that can happen:
- First, the markets can sell off faster, and get more deeply oversold at this point than I expect. That would set up a longer, stronger rally then I am presently contemplating.
- Second, the markets could break out to the upside, rallying over their March 7 highs on strong volume. Any breakout over the March highs makes this call absolutely wrong. I doubt we would even get a "head-fake breakout." A closing price over the March highs would force me to redeploy capital.
- Lastly, we could see a series of improving economic data showing inflation free growth. I don't mean the misleading headlines of unemployment or home sales; I mean honest-to-goodness nonmanipulated growth.