Tuesday, June 20, 2006

“You did not stutter . . .”

Raymond James explains what they see going forward. "Trading Lows"
Last Monday I was on the Nightly Business Report (NPR), again on Tuesday morning I did CNBC. On both of those venues I stated a “trading low” was likely at hand that would hopefully begin the bottoming sequence seen at most of the tradable “lows” of the past five years. That sequence typically begins with a trading low, followed by a sharp “throwback rally,” and then a subsequent pullback to those recent trading lows for a successful retest before the bottoming sequence is complete. And “You did not stutter,” was the comment from one portfolio manager shortly after our interview where I flatly stated that a “trading low” was at hand and recommended a scale-in buying approach for “trading positions” using the various indexes. That strategy was reprised repeatedly in our comments last week where we recommended buying a one-third trading position on Tuesday, another one-third position on Wednesday, and the final one-third on Thursday. While we recommended buying the first two tranches on Tuesday and Wednesday’s opening prices, we did not “buy” the final one-third position due to Wednesday’s outsized rally (DJIA +110 points). Plainly, our “buy ‘em” recommendation has played in spades even though we “flinched” on the final tranche of our buying program during Thursday’s upside explosion, refusing to “pay up” for a complete “trifecta.”
Read the whole thing from Raymond James.
while this current “throwback rally” in the U.S. equity markets has been impressive and may last another few sessions, we are worried about the subsequent downside retest . . . and continue to defensively position accounts accordingly.
Hoping for the best, but preparing for the worse. Bear market here we come.

Hattip The Agonist

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