This Day On The Street
Continue to site right-arrow
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
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Kass: History Favors a Bounce

This column originally appeared on Real Money Pro at 7:35 a.m. EDT on Sept. 27.

NEW YORK ( Real Money) -- Since the Bernanke sugar high, the U.S. stock market is down by about 3%, and the yield on the 10-year note has settled in at 1.61% (compared to a short-term high in yield of 1.91%).

As I have written in the five myths of quantitative easing, I expect QE3's influence to be waning on the U.S. stock market and on the domestic real economy.

But with equity prices and bond yields lower in seven of the last eight trading days and with quarter-end approaching at the close of trading on Friday, I would expect a dead-cat bounce in stocks and bond yields. (Only the most facile traders should apply to play a potential recovery in stocks over the next 48 hours.)

Stated simply, stocks are oversold, and bonds are overbought.

According SentimenTrader, in the four other times in the past 20 years when stocks were down in seven out of eight trading days after having reached a 52-week high during the prior two weeks (Aug. 13, 1992; Dec. 6, 1996; Feb. 24, 2004; and March 2, 2007), the index rebounded over the next three days each time. (Results were mixed after the initial bounce.)

Another technical positive is that the S&P 500 bottomed out yesterday very close to the level from which it recently broke out. In other words, that previous resistance area could (at least temporarily) serve as some support.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs