Monday, August 24, 2009

Reading links 8/24/2009: The market direction edition.

It’s been a while since I posted on market predictions from the financial gurus. This might be a critical time, with a few commentators warning that markets could be topping out in August.

Well, this linkfest specifically focuses on market prognostications!

  • VALUE LINE HASN’T BEEN THIS BEARISH SINCE 2000 : Value Line reduced its recommended equity allocation to the range of 60% to 70%.This reflects a cautious to outright bearish posture on Value Line’s part, since the firm has never lowered its recommended allocation to below 50%. The last time it was lower than it is now was October 2000.?

    Value Line’s rationale for lowering its recommended equity allocation was not that the economic and financial news is about to take a big turn for the worse, however. Instead, the firm’s concern is that the stock market has rallied so far, so fast, that it has gotten too far ahead of itself.
  • Marc Faber: Expect a correction over the next 2 months.(CNBC)

  • Barry Ritholtz : I wouldn’t be surprised to see a 60-70-80 % rally before all this is over and the market rolls over and dies. This is a trading rally not a multi-year rally so it’s likely to end and retrace a part of it.

    Ritholtz has 1050-1080 as an upside target for the S&P 500, with a slight chance it can go as high as 1200 (It’s a low probability event). Making up 68% of loss is not unheard of. If the rally does extend to those outer limits, Ritholtz sees the Dow topping out "somewhere around 12,000.

  • Is this the start of the big one?

    I don't believe in market calls, and trying to time turns is a perilous game. But most savvy people I know have been skeptical of this rally, beyond the initial strong bounce off the bottom. It has not had the characteristics of a bull market. Volumes have been underwhelming, no new leadership group has emerged, and as greybeards like to point out, comparatively short, large amplitude rallies are a bear market speciality.

  • Top adviser turns bullish, for at most one quarter! (Well, I thought the headline was misleading, the advisor is actually BEARISH!)

  • Paul Tudor Jones on the bear market rally
    The bottom line is that we are not inclined to aggressively chase the market here. Rather, we eye a better opportunity to be long equities into year-end on a potential autumnal pullback.

  • Rounded Reversal into Exact Fibonacci Confluence on SPY

  • TOO FAR, TOO FAST? By Rob Arnott

    Now is not the time to be complacent. Most assets are no longer the bargains they were a few short months ago. As we have stated many times, tactical asset allocation is about taking risks when they are compensated and backing away when they are not. In some cases, the snapback has led risky asset classes like equities and high yield bonds to be susceptible to further price declines

  • Let’s play Ping Pong!

    The point here isn't so much to say, "Ah, prices are extreme and this is a top". Barring a market top, the extreme move from March, 2009 is indicative of two things: 1) the easy gains are behind us; and 2) the indices will likely move sideways to higher but in a more choppy fashion. If a market top comes out of this consolidation, it is likely to develop over the next several months. In general, market tops are affairs; market bottoms are events.

  • China Stocks Enter Bear Market as Index Falls 20% From High

  • More bearish data points for equities.

  • Manic Monday I'm sorry, the reality we see in the market does not justify options prices this high. Is there a reality in the market we don't see? Because if not, Fear is way too high, and anecdotally bullish.

  • Surprising sentimentHulbert :Sentiment picture has taken an unexpected turn for the better

  • Gummy Bears. Try not to overthink what the market might be saying. Cut in half from here? Unlikely.

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