Justa's Dive Bar

[chainik]

Don't know, as usually.

On one hand, as Grantham writes, time is running out for the bears - there will be some recovery by the end of the year, and the market might run to 1000-1100 (Faber's expectations as well). Grantham is probably correct about SPX fair value (880), so there is nothing wrong with buying here for the long run.

On the other hand,
1. Intermediate-term (weeks), there still seems to be too much enthusiasm. CBOE EPC, ROBO PC, OEX PC, and insiders are all "sell".
2. Defensive sectors are doing well (a sign of return of risk aversion?).
3. A lot of articles around (including a cover in Barrons) about bear market in bonds; sentiment towards bonds is negative as well. A bond rally might coincide with a general market drop.
4. As far as I understand, Zulauf and Dalio expect to see SPX 400-500 at the bottom, maybe in 2010 or 2011.
5. A lot of room to fall here:
http://stockcharts.com/charts/indices/McSumNASD.html

Thanks to Jerry, I raised a lot of cash :) The general plan is to sell 950 and to buy 850.

I am more interested in shorting next week, and probably will try long trades at the end of May, but this is just a WAG.

I think new lows are very unlikely this year.

I would like to see a mild decline (maybe below 800?) in June or July, followed by a strong rally into the end of the year. Obviously, just a guess; useless for trading.