(By Rich Bieglmeier) Stocks tried to head higher on Tuesday, but failed. With another red day on the books, it sure looks as if Wall Street plans on taking the NASDAQ to 2,850, the Dow to 12,600 and the S&P's new address could be 1,335ish.
Short-term momentum is breaking lower, which could mean our targets come into focus within the next day or two of trading. Of course, guessing where the markets might go from day-to-day is tough stuff, but the longer-term trend is clear; the equity markets are in a downtrend.
Mr. Gloom, Boom and Doom, Marc Faber says stocks are set for a "massive meltdown" of at least 20%. He says the culprit won't be the fiscal cliff; rather, it will be the result of declining earnings thanks to a slowing or even contracting economy in 2013. As for the fiscal cliff fix, Faber says it will be some minor tax hikes in five years and some spending cuts in 100 years. In an earlier interview with Bloomberg TV, the money man deadpanned that machine guns might be the best investment right now. When the hostess pressed him, Faber responded that maybe his answer was off base and suggested a tank instead. Of course, he was joking; however, his market call may prove to be no laughing matter.
[Related -Market Needed a Yellen Bump and Didn't Get It.]
For now, we don't agree with Dr. Gloom, Boom and Doom. The lowest level we can see during the current correction is 2.750 on the NASDAQ, 12,100 for the Dow, and 1,275 for the S&P. If the safety nets of support levels fail to catch the falling knife, then we'll reconsider Faber's fortune-telling.
Maybe today's Retail Sales Report can help stocks get off the mat today; although, economists anticipate that sales for October will be down 0.1%. With Sandy disrupting lives and the backend of the month, we wouldn't be shocked to see a number that's less than expected. However, iStock feels investors are likely to give today's announcement a mulligan. We believe any lost sales will likely show up in November's result; so, the average of the two month's will probably paint a better picture.
[Related -Will The Sluggish US Housing Market Perk Up This Year?]
At 2 p.m. EST, the FOMC minutes from its meeting three weeks ago. The release could be a market mover as the street pours through he notes looking for clues on the economy and the Fed's next move. iStock will read the report and share our thoughts – if any – on what's inside.
See you tomorrow with a final take on Q3 earnings.