Wednesday, February 27, 2013

2013 Market Outlook

Let’s cut the crap and jump right into The Last Bear’s 2013 market outlook where we will give our predictions for the S&P 500, FTSE 100 and also give our three favorite currency pairs a look.

S&P 500 2013 Market Outlook

The S&P 500 started 2013 at 1,426.19 and endured a strong rally during the first two months of the year. We believe the rally will fizzle out with the looming sequester which will kick in on March 1st and therefore call for a 25% correction during 2013.

We believe the S&P 500 will close 2013 at 1,069.64. Allow an error of margin of 3% which will get us to a closing range between 1,037.55 and 1,101.73.

FTSE 100

The FTSE 100, our top pick for 2013, started the year at 5,897.80. Given weak economic performance at the start of 2013 and the Eurozone crisis we believe the FTSE 100 is due for a 15% correction during the year.

We believe the FTSE 100 will close 2013 at 5,013.13. Allow a margin of error of 3% and we have a closing range between 4,862.74 and 5,163.52.

EURUSD

The EURUSD opened 2013 at 1.3271. This one is quite tricky as both the Euro as well as the U.S. Dollar face severe problems. The Euro issues are more structural while the USD is simply not worth the paper it is printed on. Given the Eurozone debt contagion the Euro will not be able to rally as much as it should against the USD.

We believe this currency pair will close 2013 around 1.3600 for a gain of 2.48% on the year. Nothing to get too excited over, but expect nice volatility which will allow for plenty of short-term trades and the profits will add up.

GBPUSD

The GBPUSD opened 2013 at 1.63101 and formed a triple top. During the first two months the GBP has been pounded like there is no tomorrow and dropped almost 8%. We believe the GBP will emerge as one of the best currencies for 2013, if you have opened your longs around the 1.5200 level. The Sterling had to deal with weak economic reports, a loss of the UK’s AAA credit rating and a dovish Bank of England.

We believe this pair will bounce back from lows around the 1.5000 level; this currency pair may reach the 1.4750 mark should another event rattle the monarchy, and close 2013 around 1.6000 which would give traders a gain of 5.26%. We expect the next few months to be very volatile so: Traders be aware and profit with The Last Bear.

USDJPY

The USDJPY opened 2013 at 87.192 and has soared ever higher after the Bank of Japan announced that it will do all it can to devalue the Japanese Yen. The Deputy Economy Minister threw the 100 level out there. While the Yen has been collapsing and most believe it will close the year around the 95 mark we believe it is due for a strong rally primarily due to USD weakness and the potential of QE4.

We believe this pair will move the other way especially after price action February 25th which shook lose the bulls as the bears took ‘em to the slaughterhouse. Our 2013 prediction for this pair is a close around the 80.000 level which is a move of 8.25% from the opening level and over 15.79% if you got this at the top of its range; screw the 100 level.

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