Reader Mail

I had the following comment left last night.

Hi Roger. For those miserly folks that don't want to stump up a Barrons sub to read the article the post will be somewhat of a mystery... How bearish is he? As I am new to this blogsite may I ask how bearish are you?

From what I can gather some folks seem to think 1060 test for SP500 is scary, whereas others looking to at least retest and maybe undercut March 2003 lows, though less clear about when, understandably. May I be so bold as to ask for more details on your bearish technical thoughts ;)

First let me say if you spend a few minutes in the archives you will find a lot of the same stuff in more detail.

To the first point I don't read Mr. Kahn as jump up and down bearish but he had multiple charts showing all sorts of down trends and resistance lines. The points he made were compelling. You can look at a chart and usually pull anything out that you want but Mr. Kahn clearly had a point and he has a good track record.

I try to stay away from labeling my sentiment. Building on my belief of taking what the market gives I see signs of poor demand for equities. There are things going on with the yield curve, the economy and so on the lead me to conclude we are not very likely to have a great year. At the beginning of 2005 I said I thought we'd be lucky to have mid single digit returns. My reaction to this has been to reduce exposure a little and beta a lot. My positioning has allowed me to out perform the market year to date by a couple of percentage points for most accounts, accounts added since then are all over in terms of beating or lagging the market. Not earth shattering by any means but I would not want to be down 6% or 7% year to date to be sure.

The thing I rely on above all else is the 200 DMA of the S+P 500. This is the trigger point for being fully invested (or close to it) or defensive. The SPX recently breached is 200 DMA and I chronicled the action I took on this site. The trades done recently are still in place. I think we may be in for more of the same so increased exposure to boring consumer stocks still makes sense as does the reduced beta.

1164 seems to be an important level for a lot of people I read as does the 200 day for me. Hope that helps.