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Citi’s Fitzpatrick - Stocks to Plunge Another 15% to 20%
With global stock markets trading in a sea of red, top Citi analyst Tom Fitzpatrick says stocks are poised to plunge another 15% to 20%. Fitzpatrick, a 28 year veteran and top analyst at Citibank, which has $1.3 trillion in assets, sent KWN some extremely powerful charts and notes. Below were his comments with three key charts:
Tom Fitzpatrick latest report:
“German 2-year yields still negative and U.S. long end yields moving lower tells us that there is a want and/or need for safety. We would still expect a test of the trend lows on U.S. 10 year yields at 1.43% and U.S. 30 year yields at 2.50% in the short term. The next support on Japanese 10 year yields is at 71-72 basis points. That does not provide a good backdrop for equities where we now see bearish outside days on all major U.S. Indices.
The price action over the past 3 months remains similar to that seen after the 2007 trend highs. The initial move down (at that time) was 10.7% before we got a bounce of 8.3%. From there we fell away again and trended down to the 200 week moving average. This time, from the trend high, the initial leg down was 10.9% before a bounce of 8.5%. Now we have started to roll over again. A similar follow through would suggest a move down to the 200 week moving average currently at 1,137 over the coming weeks.
The Nasdaq 100 also posted a bearish outside day (see chart). The chart (below) is a weekly chart and the key supports are in the 2,366-2,438 area. This is where the parallel of the trend across the highs converges with the horizontal supports (highs from last year and low so far this year). Good support below that comes in at 2,034-2,059 and then the 200 week moving average at 1,959.
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
If the scenario unfolds the way Fitzpatrick envisions, this would also pave the way for continued dollar strength. Both Fitzpatrick and Dan Norcini believe that gold should be able to remain firm and continue to consolidate if we see another leg higher in the dollar. If you want to see Norcini’s take on this critical situation CLICK HERE.
The interviews with Jean-Marie Eveillard (oversees $50 billion), Michael Pento and Gerald Celente are available now. Also, be sure to listen to this week’s line-up of other KWN interviews which include MEP Nigel Farage, Dr. Stephen Leeb, Rick Rule, Eric Sprott and Art Cashin ($612 billion UBS) by CLICKING HERE.
Eric King
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
July 12, 2012
