07.08.08 - Time to Back up the Truck?

Just intuition here, but it looks like 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 yesterday'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 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.


NEVER INVESTMENT ADVICE