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
TheStreet Open House

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,160.58 +28.61 0.17%
S&P 500 2,002.30 +3.32 0.17%
NASDAQ 4,561.3870 +8.6280 0.19%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs