I am channeling Animal Mother. Bulls, you have a real chance of losing control. Stay sharp!
Some folks (well, one - Health Affairs - only God knows what on earth that name is supposed to mean............) suggested I would falsely claim I called the fall. I didn't call the precise fall (otherwise I'd be on Time magazine), but, come on, I gave some pretty clear warnings.
On Saturday, my entry was appropriately entitled, "I'm Starting to Like This Market". I wrote:
The Russell 2000 has been unkind, but I think we're over the worst of this. Here is a sixty day intraday graph; the head and shoulders target of 30 points to the upside has been plainly reached. Clear as a bell.
On Monday, once again, an appropriate title - "Crossroads" - where I wrote:
Accept my good wishes that the higher highs/higher lows pattern be broken in the coming weeks. The bulls must be conquered, and breaking the pattern is the first step in breaking their spirit.
Finally, after the fall, on Tuesday Night...
...as for tomorrow - - again, I haven't looked at a single chart yet, but my early guess is a quick drop in the first half hour and then a big rally afterwards. Not hundreds of point, but maybe 100.
And what, dear readers, did the market do today? There was a quick drop in the first half hour. And then it rallied 100 points (well, 137 at its peak, but you get the idea).
Let's turn to the delicious Abby Joseph Cohen and see what she had to bark today......(this is just an image; don't bother clicking on it for the video; you have to go to cnbc.com for that).
In the video interview I watched (on perpetual rah-rah CNBC, which I never, ever watch, except in the rarest of instances), she stated that the market's "valuation, if anything, has gotten a little bit better". Yep, if you liked the Dow at 12,700, you'll love it at 7,000. She goes on to say that she (it is "she", right?) is targeting a 10% increase this year........and that's conservative....."assuming a deceleration in ...profit growth..."
AJC says of the U.S. equity market......"our market is underpriced....[and represents] very good value." Of course it does, you devilish temptress! The interviewer asked her what, if anything, would give her concern about the market. Her multi-million-dollar a year answer? "Events within the economy." Well, my scrumptious little sex kitten, you certainly know how to earn your keep. Rorrrrwwwww........
Let's put our brains back in and get serious. How high will the Dow go up (ahem - "recover" - - from the "correction") before we get a chance to really rake the bulls over again? Cast thy eyes this way:
The $VIX pulling back to the horizontal line shown would make things more tempting. My God, the bid/ask spread on S&P options today was wider than Al Gore's waistline. (I think the man has decided to consume - live - anyone not living green. Notwithstanding his $30,000/year house bill on electricity and gas).
I'm going to break form and offer a few bullish ideas. Now, don't get me wrong. I don't actually buy any of this crap. I just get sick of being called a permabear. So I grit my teeth and throw some buys out now and then. Here's ABT:
LEH pulled back beautifully to its fib fan:
And SHLD, which I've mentioned repeatedly, remains a handsome graph:
I received many, many emails over the past 24 hours thanking me (some just in general, others with multi-hundred percent gains from my ideas). One kind gent even sent me a video. I share it with you now. Here, my friends, is how the bulls are coping with the market. (Although the bull is disguised as a giraffe here):