short ETF forecast workshop

Dr. Warren Huang, Founder, OSA, USA wh3928@yahoo.com    www.osawh.com

Warren Huang, Wall Street Journal Real Time Economic Blog, March 8, 2009

Investors will be back to the markets, stocks will be getting out of bear market correction as soon as housing market slump stabilize, consumer, business , mortgage default , we are getting out of economic recession by the end of this year. We are in the process of short term technical rebound 6500- 7000 before heading lower to 6000 and below , S&P 500 to 500- 600 and NASDAQ down to 1100 to reflect the state of real economy.

As we are facing new low in housing construction, worst jobless rate

GDP contraction of 6.2 % in 26 years (in 1983 level) , while stock price are still stay in 1997.

It is meaningless to use PE for valuation in recession bear market correction, as most of those big name company Fannie Mae, Freddie Mac, AIG,GM, Merrill, Bear Stearn PE plunged from 15 to 5 , finally to negative before went bankrupt. and some high fliers PE still above 50.

Those high flier stock price have to adjust downward to reasonable price too before reaching bottom.

details on www.osawh.com/SP500a.htm

www.osawh.com/macro.html

www.osawh.com/mortdefa.htm
                                                                                                                  Abstract

This paper demonstrated Huang’30 years pioneering proactive structural behavior arbitrage assets ( equities, bond, commodities, housing ) pricing mechanism research, teaching, consulting for China , Taiwan, US 15 cities 30 million   high net worth individual and institutional investors, fund managers through integrating last 30 years macro, financial , industrial economic and investors daily trading volume ( confidence ) data into real time   stock indices and its component portfolios earning performance, stock prices and commodities , housing price mechanism Operations Simulations Analysis (OSA).
These asset prices simulators have been used for tracking   global central banks monetary, economic, fiscal policy ,   financial systemic stability risks , Basel II Risk, corporate scandals applications . It quantify and compensate financial system and specific noise ( uncertainties), identify the real time global financial, housing, commodities market asset prices bubbles   deferential due to speculation resulted mispricing ( over and underpricing in interest rate, currency, inflation, housing, equities price bubbles and earning announcement ) in last 20 years global mortgage, credit, financial crisis, economic recession systemic risks , corporate scandals cycle months, years ahead of the emerging boom and bust, bull, bear market trend to maximize risks adjusted strategic indexing ETF arbitrage return for global asset allocation . These Proactive APT simulator compensate current APT and CAPM systemic noise due to betting on the wrong side of monetary policy, interest rate impact on assets price.

Huang extended proactive structural OSA arbitrage asset pricing to macro, financial, industrial econometrics integration into real time investors speculation behaviors tracking misprcing (over and underprice) through Exponential GARCH estimation and Granger causes, consequences co-integration . It simulate US Fed monetary, economic, fiscal policy rate cuts, bail out, credit , financial crisis recession impact on dollar currency, unemployment, inflation, interest rate on housing price, mortgage default , financial crisis, consumer, business demand impact on economic recession, oil, commodities, metal asset price mechanism and Dow Jones, NASDAQ, S&P 500 index, its banking, finance, high tech, retail energy, biotech component stocks earning, performances.,
He warned on 2007 Peking university International financial engineering risk management June 2007 and on Wall Street Journal   Market beat blog since Sept. 2007 and March 5, 2008 on China Fund World 2008, Shanghai Conference that US housing price slump , credit crisis continue into first half 2009 ,lead to consumer, business spending plunge 3.5 %, ISM and consumer confidence drop to 36, jobless rate soared to 7- 8 % repeating 1980 style double dip recession, with banking, finance, housing investment banks loss trillion dollars MBS, CDO, hedge fund writedown, banking, finance, mortgage stock down   70- 90 %, drag US and global stock   50-70 % bear markets correction, S&P and Dow Jones, NASDAQ plunge 50 % , Dow entering 6000- 7000 NASDAQ entering 1100- 1250, SP 500 entering 600-700- recession phase II trading range starting early 2009 ( Taiwan, Hong Kong, India stock indices down 70 %) in recession bear market correction and the overpricing of US high flier Google, Apple, Goldman Sach, China PetroChina, Sinopec, and Bear Stearn 29 billion hedge fund failure , rescue Fannie Mae, Freddie Mac , Lehman, AIG , Citigroup mortgage , credit crisis, with average error below 1.5 %, correlation over 0.98.
This work also extend proactive arbitrage pricing into financial market behavior , tracking forecast by introducing stock indices and stocks trading volume ( investor confidence) relationship into price, return forecast with correlation constant greater 0.98 , average error below 2 %
S & P 500 E-mini future hedging strategy   http://www.optionsxpress.com/welcome/tour/trade/futures/sp500.aspx?SessionID=
Keyword:   emerging market   behavior finance   arbitrage assets prices bubble, financial crisis    US mortgage default    corporate   scandals     ETF indexing arbitrage   , systemic noise risks   global stock indices   trade volume/price relations

Dr. Warren Huang (黃華南博士) Pioneer, proactive structural dynamic global inflation, macro economy, daily financial markets interest rates, currency, stock, bond, derivatives, housing, commodities, oil asset pricing and risks valuation markets fundamentals price mechanism, accurately warned on Wall Street Journal Market beat Blog Sept.19, 2007 and Mar 5, 2008 masterclass workshop China fund world 2008, Pudong, China to Goldman Sach managing directors JPM, UBS and 150 China QDII/QFII fund managers that US Fed aggressive rate cuts drag dollar to 1.53-1.65 EURO, 95- 108 Yen, economic stimulus boost consumer spending on gasoline and jet fuel summer, demand, driving gasoline , heating oil to 415, oil price to 121-145, commodity price double, will peak out as US dollar rebound follow Fed ending rate cuts cycle , can not stop sub-prime crisis spreading, regional housing price slump 30-50 % and credit crisis, crunch crisis continue through 2009 drag economy into 2009 repeating 1980 double dip inflationary recession resulted trillion housing and stock market loss and US, global stock indices and oil, commodities , metals price bubble burst bear market 50-70 % , Dow Jones test 6000- 7000 NASDAQ PLUNGE testing 1100-1250- and high fliers (GOOG, PTR, AAPL) , IT, retail stocks facing 50-- 70 % correction, with banking, finance, housing share price plunge 70- 90 %, dollar making to new low 85- 90 Yen, commodity prices doubled, and bubble burst plunge 50-70 % % in recession widening bond , CDS spread and failure in MBS/CDO, Bear Stearn 30 billion dollar MBS hedge fund and government steps rescue, Lehman bankruptcy, Fannie Mae, Freddie Mac AIG, bail out, despite Fed rate cuts . , oil price plunge from 147 to 40, copper plunged from 350 to 115, corn from 600 to 350, He also warned top global QFII management on Peking Univ June 2007 International Financial Engineering Conference that China overheated housing, stock market wealth gain resulted inflation over 8.7 % will lead to China Peoples Bank credit tightening to remove excessive liquidity, China Banking housing, stock markets follow US housing price slump, recession, bear market correction, drag China GDP plunged to 6.8 % 4Q 2008,will test 6 % first half 2009 and stay above 8 % second half 2009 due to and China 568 billion infrastructure and 10 industrial sector stimulus program maintain 2009 GDP at 7.5 % and stabilize stock markets, Shanghai traded 1500- 2100 through 09 until economy softlanding
China is suffering from housing market overheating, with 300 % gain in housing prices still up 0.5 % , FIXED investment , consumer spending still up 22 %, first 9 month GDP still up 9.9 %, CPI drop to 1.2% in Dec 2008 % after China peoples Bank cut 2 % rate after 6 rate hikes, 16 bank deposit rat hike to 17.5 %. China raise its M2 money supply growth to 12 % 17.5 Dec. 2008

Dr. Huang will be the keynote speaker for EUROMONEYs China derivatives market conference March 24-25, Shanghai 2009 to speak on 2009 China/US economic/Capital market, oil, commodity market outlook and Challenges, opportunities in China/global onshore, offshore derivative markets

Comment by Warren Huang , Wall Street Journal MarketBeat Blog- - January 16, 2009 at 4:04 pm
Comment by Warren Huang Wall Street Journal Market Beat- Blog January 23, 2009 at 2:23 pm
We have been through Phase I monetary, economic, fiscal policy impact on Global Housing, Equities, Commodities, Bond, Derivatives Asset Prices Bubble Burst Mechanism and Sub-prime on Daily Prices Dynamics , Subprime, mortgage, Credit crisis, Financial , Systemic Risks impact on Recession which causes housing price down 19 %,trillions dolllar fiancial market loss, bankruptcy of Lehman, AIG Fannie Mae Freddie, Merrill Lynch and Citigroup with deep recession -5 % GDP adn 7.2 % unemployment and now
we are entering Phase II Global recession impact on banking, credit, financial crisis and industrial sectors demand, prices slump and operating loss with jobless rate at 8- 9 % and business, consumer spending over 5 %,
will drag stock price for 20 % more correction resulted widening mortgage, credit card, business loan loss will drag Bank of America 16 billion dollar loss even JP Morgan and more banking, financials into widening loss details on http://www.osawh.com/mortdefa.htm http://www.osawh.com/recession.html http://www.osawh.com/macro.html http://www.osawh.com/SP500.ht

Bank of America 4Q 16 billion loss is inherited from merger of Merrill Lynch, with total 136 billion bailout out does not solve Bank of American nor US banking, credit, financial crisis, as we are still only hafl way to housing market price slump, with currently down 19 % will continue plunge 30 % through second half this year. which will lead to more continued loan, credit loss, will lead to write down, oerating loss for the best bank like JP Morgan, and additional loss out of Bank of American’s Merrill Lynch bad assets. US investrors speculators the market botton at 7900 will be drop into bear trap in the month ahead with Dow Jones plunge to below 7000 and SP below 700 and NASDAQ to 1250. details on http://www.osawh.com/mortdefa.htm http://www.osawh.com/SP500.htm

Comment by Warren Huang -Wall Street Journal Market Beat Blog December 30, 2008 at 3:08 pm
From my tracking of last 30 years global super housing bubble burst resulted deep recession impact on stock market receovery, We are not even through the worst of housing slump, the recession yet, It is premature to talk about market bottom and recovery.
Stock market must have another 25 % plunge to reflect the depth of housing slump and recession due to plunging consumer, business spending, continued housing slump, soaring jobless rate ,which will be around next April.Dow Jones will be around 6000, SP around 600, NASDAQ be 1100.
we will see market bottoming out from there, until more concrete result from OBAMA’s job creation to stop economy, housing market decline.
the stock will be creeping up from bottom 40 % to 8500 for Dow, 800 for SP500.
There will be no V-shape recovery for housing, nor, economy, nor atock markets. details on www.osawh.com/SP500.htm
www.osawh.com/mortdefa.htm www.osawh.com/macro.html

Comment by Warren Huang - November 5, 2008 at 7:43pm
I kept warning on this blog that market speculators ignoring plunging housing prices, consumer , business spending and confidence, ISM index and soaring job cuts, drag economy deeper into recession still using US stock are cheap to making election and yearend rally will give up all their gain return to 8000- 9000 for consolidation, back and filling.
Despite global rate cuts, trillion dollar bail out, global stocks will be drag by recession into further bear market correction.
details on www.osawh.com/mortdefa.htm www.osawh.com/SP500.htm www.osawh.com/recession.html
Comment by Warren Huang , Wall Street Journal Real Time Economics Blog- October 17, 2008 at 10:05 pm

US Sept. consumer confidence plunge to 38, ISM manufacturing purchaser index plunge to 43 and jobless rate to 6.1 % and Dow Jones plunged 40 % third quarter GDP contract 0.3 %core inflation up 2.9 %, warned, predict by me Sept. 2007 on this blog that US housing slump continue , will entering double dip inflationary recession 3Q 2008 despite rate cuts, stimulus, bail out plan and extends into deeper recession contracting by 2 % in $Q 2008 and 1Q 2009, resulted by full impact o business, consumer spending decline due to 6.5 % jobless and 20 % housing slump, 40 % stocks market loss
The real causes of current mortgage, credit, financial crisis and recession are due to poor financial, monetary policy decision modeling in asset pricing and risks valuation mechanism, MBS, CDO , the burst of super housing, commodities asset price bubbles caused by 7 year longest expansive excessive money supply, easy credit policy .
Global central banks, financial markets financial decision still rely on 30 year old probabilistic, statistical Capital Market Asset Pricing (CAPM) and macroeconomic modeling, ignoring asset price impact on inflation and financial, housing , MBS, CDO prices.
Predicted by Dr. Warren Huang, pioneer of Proactive Global Asset Pricing Mechanism , June 2007 , Beijing, Wall Street Journal Economic, Market Beat
Blog Aug.2007 and March 5, 2008 Pudong, China Fund World 2008 to 200 global top investment banking, fund managers that Global Housing price bubble burst, prices plunge 30 % into 2009, drag global economy into recession and stocks bond, oil, commodities, metals ,Derivative Asset Prices Bubbles Burst with 50 % Price Correction Cause Credit, Financial Crisis and Economic Recession, ( As Dow Jones, SP 500, NASDAQ drag global stock indices plunged more than 50 % into 2002 recession low ,( Dow Jones after current consolidate in 8000- 9000 will test 7000, NASDAQ test 1250, S&P test 700 low, oil price plunged 55 % from 147 to 64，Gas oil from1300 to 600 , corn from 800 to 350, cotton from 80 to 43 , gold from 1050 to 650 as global economy enter deep recession by year end, despite US 700 billion and ECB 2.3 trillion bail out to stabilize credit crisis

details on www.osawh.com/Fedcrisab.htm www.osawh.com/mortdefa.htm www.osawh.com/commody.html www.osawh.com/centmaf.html

Dr. Warren Huang (黃華南博士) Pioneer, proactive structural dynamic global inflation, macro economy, daily financial markets interest rates, currency, stock, bond, derivatives, housing, commodities, oil asset pricing and risks valuation markets fundamentals price mechanism, accurately warned on Wall Street Journal Market beat Blog Sept.19, 2007 and Mar 5, 2008 masterclass workshop China fund world 2008, Pudong, China to Goldman Sach managing directors JPM, UBS and 150 China QDII/QFII fund managers that US Fed aggressive rate cuts drag dollar to 1.53-1.65 EURO, 95- 108 Yen, economic stimulus boost consumer spending on gasoline and jet fuel summer, demand, driving gasoline , heating oil to 415, oil price to 121-145, commodity price double, will peak out as US dollar rebound follow Fed ending rate cuts cycle , can not stop sub-prime crisis spreading, regional housing price slump 30-50 % and credit crisis, crunch crisis continue through 2009 drag economy into 2009 double dip inflationary illion stimulus package recession resulted trillion housing and stock market loss and US, global stock indices bear market 50 % , Dow Jones test 6000- 7000 NASDAQ PLUNGE testing 1150- 1250 , SP500 testing 500- 600 in phase II credit, financial, crisis, recession and high fliers (GOOG, PTR, AAPL) , IT, retail stocks facing 50- 70 % correction, with banking, finance, housing share price plunge 70- 90 %, dollar making to new low 90 Yen, commodity prices bubble burst plunge 50-70 % in recession widening bond , CDS spread and failure in MBS/CDO, Bear Stearn 30 billion dollar MBS hedge fund and government steps rescue Fannie Mae, Freddie Mac , AIG bail out, despite Fed rate cuts . He also warned top global QFII management on Peking Univ June 2007 International Financial Engineering Conference that China overheated housing, stock market wealth gain resulted inflation over 8.7 % will lead to China Peoples Bank credit tightening to remove excessive liquidity, Banking housing, stock markets follow US housing price slump, recession, bear market correction, with Shanghai A testing 1500-1800 through early 2009 until economy softlanding
China is suffering from housing market overheating, with 300 % gain in housing prices facing correction 2009, export growth plunged 18 % Ian, 2009, let centrla banks rate cuts, and 568 billion stimulus package to maintain 8 % GDP in 2009, with M2 money supply growth from 15 % to 18.3 % next year to achieve housing price cut of 30 %, CPI to 4 %, GDP to 8 % to achieve soft landing and start of bull market stock rally.