This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Kass: Pushing the Pause Button

This blog post originally appeared on RealMoney Silver on March 27 at 8:29 a.m. EDT.


In " It Ain't Heavy, It's a Bottom," I outlined a variant view that the U.S. stock market was not only making a yearly low but, quite possibly, a generational low.

Today it might be difficult to remember the degree of pessimism that existed during those dreary early days of March as the S&P 500 hit 666 on the very day of my bottom forecast, which I openly declared on "The Kudlow Report."

Also in "It Ain't Heavy, It's a Bottom," I coupled my investment rationale (the mosaic of fundamentals, valuation and sentiment) with what I saw as some solid parallels between 2008-2009 and the 1937-1939 interim interval. That led me to a specific forecast for the S&P, which was presented in the SPDRs (SPY) chart below.

SPDR Trust (SPY) -- Expectations
Bloomberg

With the S&P 500 making a low that week in early March, I wrote the following:

A poorly positioned hedge fund community, with an historically low net long exposure and rankled by negative investment returns and the fear of continued redemptions, should provide the initial thrust to the S&P's 50-day moving average of about 810. It is important to recognize that, historically, strong rallies that have durability (like in 1937-1938) typically, as previously written, don't let investors in during the first advancing leg. With such a clear burst of momentum, the fear of being out could drive the S&P 500 as much as 15 to 40 points above the 50-day moving average, paralleling the 20% third-quarter 1938 move and producing a short-term top and a temporarily overbought market.

Subsequently, the S&P 500, only three brief weeks from my bottom call and remarkably on cue, advanced like a rocket to the 50-day moving average, which by then had declined from about 810 to 803. Since then, my expectation that the market would move as much as 15 to 40 points above the moving average, as investors would move from being fearful of being in the market to fearful of being out of the market, has been realized as well, with a precision that even baffles this writer.

I went on to write, with a continued eye toward a precision of forecast, my view that we would see some backing and filling following the market's sharp initial thrust.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
XLF $23.43 -0.85%
SPY $197.54 -0.87%
FAS $27.66 -2.71%
AIG $60.34 -1.08%
BAC $16.34 -0.12%

Markets

Chart of I:DJI
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASDAQ 4,776.5080 -51.8170 -1.07%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs