Commentary for March 10, 2009

| March 10, 2009

For several weeks, we have been closely monitoring the stock market for the start of a once-in-a-generation oversold rally that we anticipate will result in gains of 30% to 50% or more on the S&P 500 index over the next 6 to 9 months. Stocks are historically oversold across all time frames, and we have been waiting for a positive catalyst to set this massive reaction in motion. This morning, Citigroup made a surprise, positive announcement regarding earnings, igniting a sharp intraday advance that moved higher throughout the session on massive volume before closing right at the high of the day. We believe this is the catalyst that we have been waiting for and that today’s session will ultimately mark the start of the bear market rally.

As always, there are no certainties in the markets, only possibilities and probabilities. Most of the time, the highest probability that we ever observe for a given scenario is about 80%, but on extremely rare occasions–no more than once a decade–we encounter a 90% likely scenario. Today’s rally in stocks, coupled with the historic nature of the current oversold conditions, presents us with one of those extremely rare 90% probable scenarios. It will be immediately obvious if the scenario is valid or not as stocks should continue to rise dramatically during the coming sessions. Let’s see what happens…

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Category: Commentary, Market Update

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