Delicious Dozen

NEW YORK (Real Money) --

Scenario No. 4 -- Muddle Through (65% probability): The U.S. muddles through, with 1.50%-2.25% real GDP growth, and the European economies suffer a modest (but contained) business downturn. China's and India's economies grow in line relative to consensus forecasts. There is no further quantitative easing. Obama regains the White House, and the Republicans control Congress. The fiscal cliff is reduced by half (to $275 billion). S&P 500 profits for 2013 trend toward a range of $107-$109 per share as some modest margin slippage occurs (coincident with escalating inflationary pressures). Stocks, valued at 14.25x under this outcome, have 15% upside over the next nine months. S&P target is 1540.

-- Doug Kass, "Time to Be a Bullish Contrarian"

In April, I viewed the glass as half-empty in chronicling the "Dirty Dozen," 12 factors that could upend or be disruptive to the U.S. stock market. (I revisited the list in late May.)

Today, let's view the glass as half-full and consider the upside that is contained in my scenario No. 4 above (S&P 500 target of 1540 with an associated 65% probability), which yields the potential for the major indices to advance by 15% in the next six months. (My fair market value, which melds my four possible economic/stock market outcomes, remains at 1455, for 8.5% upside from here for the S&P.)

It is always important to exempt dogma from our relationship with Mr. Market.

To many (both fundamentalists and technicians), today's opening missive will be construed as a truly ludicrous forecast -- nothing more than a Pollyanna's vision of our stock market future in an imperfect world of economic blemishes, questionable policy and broken charts. Perma bears will be resoundingly critical of this uncharacteristic and optimistic exercise (and to my list that follows) just as the perma bulls were critical when I published the "Dirty Dozen."