Dave, Ironically I read this blog for the first time in quite awhile just to see if everyone was celebrating today’s action. I posted a chart on my blog that shows visually what I think is going to happen, but to summarize, I have been expecting the low to be made in Dec – March, which should launch a significant rally through the end of 08, but at what level it will start from I cannot say. I have begun to buy back in during the last week on weakness hoping to add as we go down. I am short the S&P on todays open and just took some of that position off with the very weak globex session that is currently underway. This trade was obviously a very nice gain. It may continue to drop but it was a short term trade and I was just following my rules.
I would not be surprised to see us continue down here for a bit, but my model still as of last Friday has no sell signal anywhere in sight, so it is a buy on weakness for those who can stomach it. I overrode my model when I exited based on a judgement call, which really was not that good at the time due to being a bit early, but looks better now. I had been sitting in cash for the last few weeks waiting for this drop so I could buy on the dip.
I do not watch internals too much because they do not give any leading views on what is likely to happen next, they only tell you what is obvious by just looking at the price action alone. However, the A/D line has been diverging during the run up which I pointed out in my blog a few days ago. This was not a good sign for the near term.
The PPT is hard at work via the bogus 3.9 GDP and revised employment numbers, to try and hold this thing up, but that is just my opinion and far from a fact. It is very hard to believe we have that level of growth going on. Election years have generally been good years to be long stocks historically, so with low rates, I see no reason why 08 will be any different. However, if my model flashes a sell, I will run for the hills without injecting any opinions into it. If the Dems get the house and raise taxes, look out below in 09.
Best wishes to everyone for a great 2008, I will stop in from time to time and if I think there is anything I can add of value I will do so. Even though there are many great people in here, the general negativity was just wearing on me too much to read each day.
