Is it Time to Back Up the Truck?

by: Jeff Pietsch posted on: July 08, 2008 | about stocks: DIA / QQQQ / SPY    


 

 

 

 

 

 

 

 

Just intuition here, but it looks like it's time to back up the truck to me. Put a nice chunk in at the pre. As I've written here, there has not been a big event-driven and/or high-fear sell-off during this decline, but it has been so extended and so many stocks are at extreme, read historic relative lows, a swing trade for the intermediate trader has to be setting up.

There is certainly a lot of downside priced in at this time, and this little energy down move could be just the "fuel" we've needed for a little reversal. Of course nothing - HAS - to happen -- especially any particular way that I foresee!

MID-DAY POSTING (9:45AM PST)


Cumulative Tick looks strong at the mid-day and most sectors are trending slowly higher after a mild retest of Monday's lows. The AD line is flirting with the unchanged. Jamie D. is stating the obvious, but it's good to have a competent and confident voice recapping where we are at without a hint of that deer in the headlights look Mr. B. gets. I especially like his candid, articulate political comments hurled at the opportunist regulatory moves afoot. He's got my vote.

INVESTOR LETTER EXCERPT

A little paste-in from my investor letter is provided below. By my estimation, we are currently at the low end of the fair-value range for the S&P 500. On the other hand, “typical” bear corrections are said to run about thirty percentage points from their respective tops, leaving open the possibility of another eventual ten percentage point-plus correction to the downside (say S&P 500 ~ 1,100).

The S&P Investment Policy Committee recently reduced its forward estimate to $89 per share -- with second quarter earnings announcements just around the corner, we will see how they measure up. As shown in Method 1, the market is either pricing in worse earnings, requiring a higher rate of return, or both.


 

This article has 9 comments! Add yours below...

Jeff Pietsch

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This article has 9 comments:

  •  
    Things Come
    Undone
    Jul 08 02:14 PM
    You might be right but Sept is a bad month for the market so nobody will buy until after Sept, also you have a Presidential election where a Dem is expected to win but the big money guys are Republican.
    What do you want to bet the big money guys will be moving their money out of the country if Obama wins?
    Its only when the profits start that big money will come back to the market.
    So I suggest waiting until Sept to buy I'm hoping for more bad news so I can buy cheap.
  •  
    proseadvocat
    e
    Jul 08 02:53 PM
    I'm unsure of this back-up the truck metaphor? The author suggests it's time to bet the farm but, he admits only a technical short term signal. The average Joe would be confused. Likewise, the money is already on our boy with three Arabic names. They know that he could never beat the powers that be, that is why they got out the Reps to vote for him in the Dem Caucus in Iowa. John Edwards is the only one who could have done it. Nothing is left now but the crying. They even panned Hillary so no Rep women could vote for a woman. There is no way in this racist and reactionary country that a dark man with an Arab name is going to sit in the White house. The Supreme Court will surely find a way like they did in 2000. Look out for race riots in November. Stocks are the last place to park until the dust has settled.
  •  
    Dan Walker
    Jul 08 03:04 PM
    "By my estimation, we are currently at the low end of the fair-value range for the S&P 500."

    The most polite way I have heard it put yet. But there is a gem in your conclusion...markets do not typically move in a straight line although almost straight down from May sure seems like it. We need a relief rally to shake out the weaker, later shorts. Then you can get your correction to the downside target. The problem is everyone else on the street knows this. What to do? I find it particularly disturbing that three institutions I would normally consider relatively sane and sober have forecast the biggest rally of all time in the second quarter. Shagging balls in the rough is normally my job; these guys are supposed to be on the green. What is going on here?
  •  
    Dan Walker
    Jul 08 03:22 PM
    Second HALF. Why is there no edit button here?
  •  
    LarryH
    Jul 08 03:42 PM
    The market is not predictable to the point of waiting for a certain month to buy. Now appears to be a good time to buy BECAUSE everyone is waiting a little longer and hoping the market will be lower. It probably won't be. We are due a strong bounce. It doesn't mean a new bull market, but we are due a good rebound. It may be over by September.
  •  
    eddie o
    Jul 08 04:44 PM
    It's a shame we've had to trade Louis Rukeyser for Jim Cramer although both had or have their own merits. Louis would have had some pithy but positive support for your note and advised folks not to panic as we've seen this show many times before.
  •  
    Clavis
    Jul 09 05:00 PM
    I have backed the truck up, but for commodities!
  •  
    bill d
    Jul 10 12:43 AM
    Take care when backing up the truck lest it runs your ass over !!!
  •  
    bill d
    Jul 10 12:44 AM
    Yeah - I don't know what the hell that means but it sounds very wise !!!
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