His call for this week:
Despite the potential for a trading rally spurred by a surprise banking crisis solution from the Obama administration over the weekend, we stated in last Thursday’s comments that we were “sitting this one out” due to the technical damage that has been done to the major market averages and the fact that we are now into mid-January, where we have long suggested a correction would be due. Moreover, in the past seven trading sessions there have been two 90% Downside Days (1/14 and 1/20). Recent history shows that when two 90% Downside Days occur relatively close together, they tend to be followed by several more 90% Downside Days. Nevertheless, while we are cautious, we think it is a mistake to get too bearish here. As Jim Bianco noted – even if you peg all the financials in the DJIA at zero it would only take another 300 points out of the DJIA, which would still not take it below its November “low.” Further, in past missives we have referenced Franklin D. Roosevelt urging participants to read his inaugural address from 1933 and commenting that it reads like it could have been written yesterday. Interestingly, while we are not predicting it, our friends at “thechartstore.com” picked-up on the 1933 FDR theme and included the nearby chart showing a 67% stock market rally in FDR’s first term. And, don’t look now, but crude oil appears to have bottomed.
Jeff was seen also at Bloomberg TV today.
You know, we are more concerned that real economy goes much deeper than priced in by the markets, before it gets any push by fiscal stimulus ... Banks are not much worth, whatever you do?
Consider as a probability!
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