Back in the beginning of April, the Bully called for a 50% retracement in stocks that would likely take us above 1000 level on the S&P (see link below). Actually, technically speaking, the 50% retracement level is closer to 1125 but no matter how you slice it we're basically there. Can you smell the optimism in the air now that "the recession is over"? Hmmmm...investors are eating up the profits and asset prices that are being supported by the government pumping tons of stimulus into the economy. But the structural issues surrounding our economy continue to be avoided and have only gotten worse. The only way to find a true bottom in the market is without intervention. It's only a matter of time until the index finger collapses on the hopes of a V shaped recovery and all that is left is the market giving investors the middle finger.
For the one or two of you who look to the Bully for market and financial advice, now is a great time to sell your equity positions and start getting defensive again. Surely you can't imagine this would be the right move with such optimism brewing but these are the moments that define great investors (going against the thundering herd). With Wall St. paying out huge bonuses again and Main St. suffering, you can bet your sweet bottom that more stimulus is going to be hard to come by when it's needed again (which will be soon).
http://thebullycockpit.blogspot.com/2009/04/50-retracement.html
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