It is interesting to see how close the institutional S&P 500 forecasts for 2009 come to the price level possibilities suggested by the S&P 500 chart.  Maybe fundamentals and technicals are converging on an idea, or maybe the institutions use technical indicators more than one might expect.

click image to enlarge

This chart of S&P 500 rather readily suggests a range of around 750 to 1,000 for the S&P, and also a possible retracement level of about 800.  Those numbers are not too different from the range of forecasts put out by the big boys.

On the chart, the 750 and 1,000 levels could be seen as significant resistance and support levels, and 800 could be seen as a likely 50% retracement from the recent high to the March low.

Those same price levels correspond generally to the

There are many institutional S&P 500 forecasts in the media for 2009, generally ranging from 850 to 1100 with some outliers on each side, but seldom is the underlying detail provided. One of the more common methods of estimation involves normalization of earnings times a reasonable multiple based on history.

This article will attempt to back into some of the leading institutional projections using normalized earnings and historically experienced multiples.

Key Historical Index Price Levels:

The S&P stands now at 924. It had a low of 741 last November and 666 in March. The high in 2007 was approximately 1575. The low in 2002-2003 was approximately 770.

Institutional Estimates:

We cataloged a number of institutional forecasts in a recent article. The forecasts here come from that article plus a few newer ones. Estimate publication dates range from early May through now (issued within approximately a month).

Goldman this week

There are many institutional S&P 500 forecasts in the media for 2009, generally ranging from 850 to 1100 with some outliers on each side, but seldom is the underlying detail provided.  One of the more common methods of estimation involves normalization of earnings times a reasonable multiple based on history.

This article will attempt to back into some of the leading institutional projections using normalized earnings and historically experienced multiples.

Key Historical Index Price Levels:

The S&P stands now at 946.  It had a low of 741 last November and 666 in March. The high in 2007 was approximately 1575.  The low in 2002-2003 was approximately 770.

Institutional Estimates:

We cataloged a number of institutional forecasts in a recent article.  The forecasts here come from that article plus a few newer ones.  Estimate publication dates range from early May through now (issued within approximately a month).

Goldman this week stated an expectation of 950

Daedalus warned his son not to fly too close to the sun, nor too close to the sea. Overcome by the giddiness that flying lent him, Icarus soared through the sky curiously, but in the process he came too close to the sun, which melted the wax. Icarus kept flapping his wings but soon realized that he had no feathers left and that he was only flapping his bare arms. And so, Icarus fell into the sea. - Wikipedia entry on Icarus

Whether it is merely temporary or a sign of something more durable it is hard to escape the fact that as the discourse on green shoots and second derivatives linger we might be entering a new leg of this crisis. Thus, there should be no mistake. We are very much still stuck in the mire and especially so in the context of the so-called developed OECD economies

With the recent barrage of appaling macroeconomic data from the first quarter in the context of especially Europe, one has to wonder whether those much hailed green shoots aren't, as Hempton pointed out recently, turning into brown shoots. Personally, I think don't think we are out of the woods yet; in fact, as far as I can see we haven't even entered yet since the real question is what the new global economy will look like what level of capacity and trend growth key economies will be able to muster.

Consequently and although I am lukewarm about the idea of green shoots and second derivatives, I am more positive about the narrative presented by BlackRock Inc's Bob Doll when he points to the potential in emerging markets;

Emerging-market stocks may gain an average of 20 percent this year as they rebound faster and stronger than their peers in developed countries,

Deutsche Bank Securities analyst Jorge Beristain wrote that 2008 guidance “remains on track” and upbeat. Beristain maintained his Buy rating on Cleveland-Cliffs and raised his target price to $115.

Track Beristain and other Deutche Bank analyst picks at:

http://www.trackthepros.com/categories.php?category_id=420

The stock has almost tripled in the past 12 months on the demand for steel and its rising price. However, a major shareholder just plunked down $102 million, an average of $92.75 a share. Harbinger Capital now owns 13.9 million shares of Cleveland-Cliffs, a 15.3% stake. Harbinger has nvested more than $275 million in Cleveland-Cliffs.