From various web reports, The
Economic Cycle Research Institute’s latest report indicates recession. This is not the Leading economic Indicators
from the Conference Board that I wrote about last week; ECRI is a separate
outfit.
Just
last week, Lakshman Achuthan, the ECRI chief economist said on the NPR radio
program, “All Things Considered”..."What we're living through and dealing
with now has been building for decades. If you look at the data, you see that
the pace of expansion has been stair-stepping down ever since the 1970s, on all
counts — on production, how much can we produce, how many jobs can we create,
how much money do we make how much do we sell? These are all trending
down."
So,
Achuthan says “...it is likely that we will see more recessions than anyone is
used to for the next five or ten years.”
From:
http://www.businesscycle.com/news_events/news_details/3084
I’ve suggested that same thought in
prior blogs from looking at data from the 1966-1982 Bear market. There were three-recessions during that
16-year period. We may be in for a rough
time ahead; but that doesn’t mean we couldn’t go higher now. Crisis-timing is harder than stock-market timing.
Enough bad news! Let’s consider some good news. As reported from several web sites, Bob
Brinker called a BUY last week. I know
many followers of this site (me included) think highly of Bob. His Moneytalk radio program and his
“Marketimer” newsletter are quite popular. (See http://www.bobbrinker.com/)
Since Bob Brinker is recommending a
Buy (or at least he suggested buying in the vicinity of the prior lows) his long
term, timing-model is currently Bullish.
With that as background, there are
several reasons to suggest that the S&P low of 1119 might be the final low
for this cycle. (1) As I noted this past
Thursday and Friday, Breadth (percent advancers) reached extremely low levels
at the 22 September 1129 retest last week.
(2) We hit the S&P 1120’s for the 4th time last week and
the low held. (3) Advancing and
declining issues were somewhat improved from the 8 August low, so a case can be
made that the 1119 low was the bottom.
(4) Historically, pre-Presidential election years are up-years. (The Politicians will do ANYTHING to get
re-elected.)
So those are my guesses why Bob
Brinker issued a Buy call last week; that, along with his longer-term model.
Just keep in mind, there is nothing
in his model that covers International Debt crisis, World-wide Banking system
failure, or Housing Crisis. That is why
Bob Brinker never called a sell in 2008 or 2009. To his credit, Bob has been good at calling
bottoms even in the absence of a sell call so his Buy-recommendation deserves
serious consideration.
My take: I don’t like the economy
now. (See the first paragraph of this
Blog.) Valuation is high using the Schiller model (as analyzed by
Hussman). VIX is very high, although it
did pullback some today.
We may indeed find that Bob Brinker
was correct if the S&P successfully tests the 1119 low. In the meantime, I would like more
confirmation of the bottom and we may get it soon....or not.
In the near term I am playing this
as a bounce and I upped my long position in the trading portfolio this morning
to 100% long.
Today,
Monday, the Navigate the Stock Market analysis improved and switched to HOLD. (A few more days like today and the NTSM analysis might even switch to buy.)
I sold on the 27 July sell signal at S&P 500 1301 and I am
defensively positioned with only a small amount of my portfolio invested in
stocks. (Zero stocks in the 401k.) (See the page “How to
Use the NTSM System” – the link is on the right side of this page).
