How Likely Is It That the Market Rallies Here?

Was just looking at a chart of the S&P 500 Index


141003 SP500


Seems that we are at a decision point.  Several years of history suggest that prices hold here.

In addition, the following video shows Ray Dalio explaining why he agrees with the Fed about interest rates.



 More from Bridgewater's Dalio here .

He warns, however, that due to The Federal Reserve's extreme monetary policy, "the prospective return of asset classes is very narrow," with expected returns for equities of "only about 4 percent."

This is a problem, he explains, as monetary policy relies on that transmission mechanism of apparent wealth creation to keep the dream alive.

While he believes in the short-term, the US economy can maintain stability (not commenting on the market per se), his "biggest concern is when the next downturn comes in 1-2 years," the central bank must be on the 'tighter' side of market expectations to be capable of providing its life-giving elixir once again.

Nonetheless, Dalio sums it up by reminding  … "There is always a downturn."

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