A couple of things to consider.
I will remain bullish unless the S&P 500 breaks 800 on a monthly close. ISYN expects a long overdue rally… and a violent one at that. There is a strong possibility that we retest the lows again within the first six months of 2009 (assuming 2002/2003 lows are the actual lows). Some anecdotal evidence has begun to emerge as television shows have started discussing the stock market and weakening economy – not CNBC shows, but regular ones. Analysts are coming out with absurd predictions much like GS did with their $200 per barrel oil forecast when oil was around $135. When analysts start going to the extremes it’s a solid sign of an inevitable and imminent trend reversal. Added to this extremism is that hedge funds have begun to throw in the towel on 2008… see HERE to review a BBerg article. Executives are also beginning to snap up shares at a rapid pace…. see HERE for article. While that indicator has not yielded excellent results recently I expect it will reap positively over the next 6-12 months.
There are some potentially severe risks associated with long positions here. If the autos don’t receive some form of aid it will destroy the economy and plunge us into a much longer and deeper recession. The package doesn’t have to be a bailout but something does have to happen. There is also an increased risk of a terrorist attack as our new president transitions into office. This is the period when we seem to be most vulnerable as a government. Global political tensions have been increasing as well due in part to the faltering global economy. The main concern I have is with the event nobody’s considered yet… something out of right field… a Black Swan of sorts. Despite all of the uncertainty ISYN remains bullish until I see something to change my mind. I’ve only become bullish as of October 22, or 955 on the S&P 500. I was definitely a bit early.
