Monday, July 7, 2008

Rally - It is Coming

I am back and exhausted. Easily a top five weekend of my life. It involved a small Texas town rodeo, fishing, town square street dance, Cory Marrow concert, and fun all weekend with friends. Just incredible.

Turning to the markets I think we getting close to a rally. I do not think we are quite there yet but we are close. In the last two weeks I have sold 20% of the put holdings I have had on the S&P 500 at 1250. I bought these over a month ago and my belief we are getting close to an interim bottom is causing me to slowly scale out.

Jeffrey Saut had some interesting commentary about a potential for a rally.

Meanwhile, it is session 33 in the “selling stampede,” our proprietary oversold indicator is more oversold than it was at the March 2003 “low” (we were bullish there as well), the spread between Lowry’s Buying Power Index (demand) and Lowry’s Selling Pressure Index (supply) is the widest in the 75-year history of Lowry’s (indicating that stocks are severely oversold), corporate insiders’ selling is at rock-bottom lows, and we are seeing numerous indices not confirming the D-J Industrial’s “downside dive.” It’s not that we are turning aggressively bullish, but we think that unless the markets are in “crash mode” it is time to consider a corrective stock market rally as B.J Thomas warms up in the wings with the song “Raindrops.”

Of course the problem is we may be in actual crash mode.

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