S&P short term cycle swings

[SyndicateTwo]

When all is said and done, it will always (eventually) come back to the overall market's valuation. Read this --


http://www.breifing.com/GeneralContent/Investor/Active/ArticlePopup/ArticlePopup.aspx?SiteName=Investor&ArticleId=NS20081112100542TakingStock

Also this:

http://www.cnbc.com/id/27674302


That basically tells you that even if the total combined EPS of all 500 SPX companies falls 30% more than the $89 per share expected now (down from $99), the index trades at a 14x multiple and will sport a 7% dividend yeild. Compare that to the 10 year bond at around 3.5% and you can see that the stock market right now even assuming futher deterioration in EPS is way undervalued.

The market right now is not trading on 'value', it's trading on mechanics -- or forced liquidation by all these a-hole hedge funds that triple leveraged their trades.

Good news is that it appears as that BRCM chart above shows and reflects most of the big tech stocks like AAPL and RIMM that we are in a 5th. Because that's a daily chart, the wave lengths seem to be about 2 to 4 weeks long. We're done with 1 week. So, our bottom could come this week or next with a low that is probably right here or near here.

Owning AAPL with a basis under say, $105, is probably a safe bet because these large traders are going to want to get serious 'alpha' to get their losses back quickly. The best way to do that is to pile into Nasdaq and Russell 2000 stocks. AAPL, RIMM, GOOG, QQQQ, BRCM, etc will be the stocks of choice because they are 'safe' in that they all make a ton of money.

It's one of those times that you have to hold your nose and deal with it and just let it get out of the way. It's not as if you bought AAPL with a basis over $150.