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Chart: 4 Bad Bears revisited

March 23, 2009 6:24 pm

Where do we go from here?

The new plan from the Treasury and the big bucks from the Fed sure got the party rolling today. Could this be the end of the pain? Somehow, it does not seem that way, considering that the most recent estimate for earnings on the S&P 500 is $41 per shares for 2009 and $46 for 2010.

Even putting a P/E of 20 shows that we are not way above target. The move today may have included new buyers, but it was still a good mix of short-covering panic over 805. The next few days ( without government intervention) will be critical to determine direction.

(Click chart to enlarge)

four-bears-large

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Written by Andrew Horowitz · Category(s) Economy, Gameplan, Markets    |  Tags: •   

4 Responses to “Chart: 4 Bad Bears revisited”

  1. VPro on April 5th, 2009 8:54 pm

    Where do we go from here? IMHO: S&P 875 > 903 > 943 > 1000. Just take it swing point by swing point.
    I've been pouring over charts of the bottoms of '87, '98, 2000, & '03. I believe 3/6/09 is a major bottom.
    Following are a few fundamental reasons I have too.

    1. The Fed and Treasury have plainly demonstrated that they'll give the banks whatever capital they need.

    2. 10/08, Warren Buffet told everyone he was buying stocks and urged others to do so and what happened? We went down hard from there. Then on 3/9/09 he did an interview on CNBC and he didn't want to talk about buying things because he said the "economy is in shambles". Remember, this is the man who's mantra has been "be greedy when others are fearful, and fearful when others are greedy". With the level of fear and pessimism in the markets that means he should be buying but he's too scared.

    3. The Obama administration is looking to reinstate the uptick rule and get some regulations back into the system, and the SEC is bound to improve from here right, after being so direlect in their duties.

    4. The Wall Street Journal is adding a sports section.

    5. Technically, the previous lows in 10/08 and 11/21/08 were on very high volume. The majority of people seem to be looking for that same kind of capitulation day to signal a bottom and there is the camp that says "we've seen this before" and won't buy in. There's a lot of money on the sidelines waiting to get in.
    Here's a link to a fellow who utilizes the same methods I do and he's a very good trader. He's posted some great charts of how we came off the 2003 lows.

    feed://moneyfromthemarket.blogspot.com/feeds/posts/default

    Also, check out this Part 3 video "Spotting the Bottom" from the stockcharts.com Chartwatchers newsletter

    http://www.investedcentral.com/public/982.cfm

    Happy Trading!

  2. Brent on July 8th, 2010 8:15 am

    A very interesting report. I find it useful as a measure of technological trends, as well as for my personal decisions on the use of TI tools.

  3. Anne Wolfe on November 15th, 2010 9:15 am

    The bear strategy is not good in this kind of situation.

  4. Terri J. Bloom on December 21st, 2010 8:23 am

    The Obama administration is looking to reinstate the uptick rule and get some regulations back into the system, and the SEC is bound to improve from here right, after being so direlect in their duties.

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