Dow 11600

I never liked the Dow Jones Industrial Average, and here are some great reasons why not. But the guys in the Pit like the Dow, so when in Rome ...

I called the DOW.TOUCH.12000 back in late 2005 for 2006, and now I am calling for DOW.TOUCH.11600 in the next few months. While I don't think that equities are overvalued, I think a moderate selloff is coming, due to the following drivers:

+ end of reporting and fiscal year for many mutual funds and banks is holding off meaningful selling

+ VIX (volatility index) sputtering down to a 10 year low, and the suggested rebound in vol will bring some fear back to balance the greed

+ while most earnings reports are still to the upside, the share of disappointments is growing vs. previous earnings season. Also, revenues are not increasing as quickly anymore.

I don't think there will be much of a housing crash. And even so, I don't think a housing crash will affect things very much. Of course, the bears say different (but they are also extinct).

UPDATE: The Dow puked 30 points in the 30 minutes after this post went up. Strange coincidence, me thinks.