At this point I would rather be short, than long and trade the swings.
I'm on the other side of the trade, I think that we've started a multimonth rally in stocks, I have to tell you that
about 90% of the people I talk to, and many of them are pretty smart, are not seeing any staying power to
this rally.
So I'm inclined to be on the other side For me it's been an issue of time to this decline and we've had a
nice Fibonacci Harmony to this bit down leg from March of 2000.
I see many more positive catalysts than just a cute "fade the crowd" rally idea. The amount of Monetary Stimulus
could get his market back to NASD 4500 and SPX 1500 if we did not have the torrential selling that we've
been and will continue to see. that's why a more two- way directional move that can get to Nasd 3162 is more
likely ( I 'm not sure of an SPX and DJIA target tonight...I'll ponder it).
9-11-01 can act as much more of a V shaped catalyst. Looking at the price to sales ratio's of hundreds of stocks
shows that they are cheaper than in several years.
I could see a rally back to 3161 in the NASD by the end of Feb 2002. That's a pretty upbeat target in these
bearish times. And it would be a 3 wave or 6 wave complex corrective affair, that many including myself would
break down into shorter term bull or and bear moves.
THE SINGLE MOST BULLISH ASPECT of the Current Situation, is the vertical , parabollic rise we've seen in
the Credit Markets the rally in the Eurodollar, Fed Fund and Short term debt contracts, are saying that we
can have a massive rally in US Equities.!!
Using an analogy, even if this is July of 1992 in the Nikkei . The forceful lowering of Credit market rates should
lead to a rally similar to what we saw in Japan, off of the 1992, low. That rally was over 80%.
If I had to name 2 stocks that shows the ultra cheap valuations in this market they would be CMRC and CD.
I have a list of many more. I'll highlight the constructive fundamentals of each in the near future. (Ray ....remind
me please!!!)
John
PS........... It's late so this is only about a quarter of my argument but, I'm off to the doctor tomorrow and
will not be tomorrow around much, hopefully I can enhance this thesis. |
