Commentary for March 5, 2009

| March 5, 2009

As we have observed recently, we are on the brink of a historic trading opportunity. If you are a trader, you should be watching the market every day for the start of what should prove to be a massive rally. Using previous bear market rallies following a crash of this magnitude as a guide, the S&P 500 index can be expected to rally 30% to 50%–or even more–over the next 6 to 9 months. Additionally, stocks are now oversold across all time frames, suggesting that conditions are optimal for the start of the reaction. Let’s review those charts once again:

The market is eager to rally; it is simply waiting for a catalyst to set the reaction in motion. The turning point can come any time now and it will probably occur sometime during the next several weeks. Of course, we often note that there are no certainties in the market, only possibilities and probabilities, but every once in a generation an opportunity like this one presents itself where the odds are as close to a “sure thing” as we ever see in the investing arena. As we mentioned in a recent commentary, the last time this type of opportunity presented itself was 1974, some 35 years ago, and it may not present itself again for another 35 years. As Warren Buffett says, when a perfect pitch comes your way you should swing for the fences. This setup is the proverbial perfect pitch. We will continue to watch for the beginning of the rally.

Category: Commentary, Market Update


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