Bob didn't think the market bottomed last week. Here is just a brief excerpt from my newsletter last weekend. If you would like the entire newsletter, drop me a line.
David Korn's Stock Market Commentary, Interpretation of Moneytalk, Financial Education, Helpful Links, Guest Editorials and Special Alert E-mail Service.
October 12-13, 2002 Edition
CALLER OF THE DAY!
Caller of the day: This past week, the S&P500 Index fell to as low as 775.80 intra-day, which was about the low that the index reached back in July, 2002. Do you think there is any significance to the fact that the market bounced back on Thursday and Friday as far as establishing a temporary bottom in the market? Bob seemed to have been expecting a question along these lines, and jumped right into what sounded like a prepared answer. Bob said one of the things that has been amazing to him, is the amount of attention that was given to the market's bounce on Thursday and Friday. Bob says the amount of excitement generated by Thursday and Friday's market rise, is seemingly without regard to the decline that had preceded that. Prior to Thursday and Friday's bounce, the market had been undergoing a precipitous decline and had gone down extremely sharply. Sure it bounced Thursday and Friday, but all the focus was on the bounce, but not the declines before that. Bob noted that for the moment, people want to latch onto any upticks, or any bounces that come along. For the most part, Bob noted that these declarations are coming from the perma-bulls --- those with life-long bullish positions who have ridden down fully invested positions all the way. For that reason, they must attach such importance to these bounces.
Editorial Comment: A few things here. First, I am glad Bob addressed this call, because it shows that he doesn't believe this bounce marks the beginning of the next cyclical bull market trend. I agree with Bob that the bounce came on the heels of enormous selling pressure; however, I disagree with Bob over the importance of the market's action this past week as I do think a "temporary bottom" or short-term rally is in the works right now. The caller didn't ask if the cyclical bear market is over, he asked whether there might be a temporary bottom in place which I liken to the temporary bottom that we saw following the September terrorist attacks through the January highs. This resulted in gains in excess of 20% for the major indices.
BOTTOMS UP?
Brinker Comment: Bob took a few shots at the analytic community on Wall Street suggesting that they are drinking "hope cocktails." Bob derided those who thought the market bottomed when the S&P500 Index was in the 1100s. Then, when the S&P500 Index fell to 966 after the terrorist attacks, they called that the bottom. This goes on and on, with more and more erroneous predictions of where the market would bottom. These predictions have turned out to be "a joke."
EC: This comment by Bob came at the end of his opening monologue on Sunday's show, and further suggests to me that Bob does not believe that the market bottomed on Thursday as so many analysts came out and once again called Thursday "THE bottom."
EC#2: I hope all of you received the Special Alert e-mail I sent out Wednesday night after these new all-time bear market closing lows had been recorded. The reason for that e-mail, is that I now believe an "area low" has been established. I will elaborate more on that in next weekend's e-mail. In addition, a substantial rally may have begun on Thursday morning.
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