Writing this midday with the S&P 500 down 21 at 2701, I have been contemplating whether to venture forth to make a fool of myself by putting in writing my best guess that this decline may be over. For the last several days of declines – especially down 600 and again today – the number of advancing stocks has been surprisingly large. There are still more new lows by a fair percentage, but the absolute difference between new lows and highs is not huge and could flip [albeit it would be better confirmation of the bottom if new highs were winning out]. Not that it is determinative, but a low here would make a perfect head-and-shoulders bottom in pretty much every stock index.
While I do not want to give too much credence to charts – not less a presumption about the future development of a chart – I find it interesting that most commentary now seems to assume that the market goes lower. With 5 and 10-year interest rates backing off and with most stocks below 15x next year’s earnings, going against the grain seems like the best course here.
Chief Investment Strategist