Today the S&P500 recovered all the losses made since it crashed below its 200 day moving average in August.
Note the next graphic shows a test of the low to make a "W bottom" followed by a near perfect test from above of the tip "^" of the "W" between the two lows.
The final image shows how far below the peaks the markets were during at the closing low just over two months ago.
Hopefully you all joined me in:
Significant Profit taking before the August crash
Significant buying while making and testing the lows
Taking some very nice profits NOW that we've recovered.
The final image shows how far below the peaks the markets were during at the closing low just over two months ago.
At the start of the month I wrote here that Bob Brinker was looking for a test of the August lows to issue a buy signal.
The initial stage of the current major correction (more than a 10% decline) has taken the S&P 500 Index into the 1800s range. Now that the initial correction stage is completed, Bob expects the S&P to stage a short-term rally which will run out of steam and roll over into a test of the initial bottom area. The establishment of an initial area of a correction bottom, followed by a successful test of the bottom area, is a pattern of market behavior that has occurred many times and has led the market higher going forward.
Brinker's been fully invested since March 2003 so if you follow him, it would only be useful if you inherited or found money and were taking his advice to dollar cost average it into the fully invested position he recommends.
Market Update and comparison to August 25 closing low data.It will be interesting to see if all who said they would buy on a test of the $SPX low are buying now that we are there. $SPY $DIA
Posted by Kirk Lindstrom's Investment Letter on Monday, September 28, 2015
Click Images to see Full Size Click for Original Post
IF Bob Brinker gives the buy signal on this "test" of the lows described on my facebook page yesterday, AND you are following his advice, THEN you would stop your "dollar cost average program of new money" and "lump sum" it into the market right away. I took very significant profits when the markets were higher and put some into the market including when we made the lows last month. If you are interested in what I am buying or selling now for my "Explore Portfolio" then subscribe to my newsletter:
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Bob Brinker & Louis Navellier Market Projections and Outlook: Both Brinker and Navellier expect the markets to "test" their recent lows
The stock markets are up significantly from their August 2015 lows. Both Bob Brinker and Louis Navellier expect the market to test those lows before making new record highs.
Bob Brinker is still constructive on the stock market. Although the primary catalyst for the current correction is concern related to the slowdown in economic grow in China, he does not see indications that a recession is on the horizon in the US. In the absence of a recession outlook he does not anticipate a bear market decline of 20% or more.
The initial stage of the current major correction (more than a 10% decline) has taken the S&P 500 Index into the 1800s range. Now that the initial correction stage is completed, Bob expects the S&P to stage a short-term rally which will run out of steam and roll over into a test of the initial bottom area. The establishment of an initial area of a correction bottom, followed by a successful test of the bottom area, is a pattern of market behavior that has occurred many times and has led the market higher going forward.
This matches what Louis Navellier sent me via email this morning titled
"Caution: We Could See another Retest of the Market Lows This Week"
The big sell-off on Tuesday looked like a classic retest of the August 24th lows, but trading volume was light due to the upcoming Labor Day weekend, so I believe that a real retest on higher trading volume is likely this week, after the long holiday weekend.
I know it's painful to watch CNBC and fear the worst, but this is a normal market shake-out. All I care about is that any selling pressure is "exhausted" on the inevitable retest(s). I expect that any such higher-volume retest will occur by next Tuesday, September 16, the day the Federal Open Market Committee (FOMC) meets. The next day, September 17, the Fed will announce its long-awaited interest rate decision and also provide guidance on its policy parameters moving forward. Due to chaos around the world and an abrupt slowdown in China, I expect that the Fed will postpone the expected September interest rate hike until its December FOMC meeting. I also expect a substantial stock market rebound if the September 17th FOMC statement is interpreted as "positive."
Are Bob Brinker and Louis Navellier correct or have they missed the lows?
Beware! In 2007 and repeated in early 2008, Bob Brinker said (see Bob Brinker's Asset Allocation History) the roughly 10% declines off the then record all-time highs in the mid 1,500s were "Gift Horse" buying opportunities. From page 3 of the January 2008 Marketimer, Brinker wrote:
“In summary, the Marketimer stock market timing model indicates that conditions are favorable for the market as we enter 2008. We expect the S&P Index to achieve new record highs this year and to reach the 1600’s rang in the process. We continue to rate the market attractive for purchase on any weakness into the S&P 500 Index mid-1400’s range. Above this range we prefer a dollar-cost-average approach for new purchases. All Marketimer model portfolios remain fully invested as we enter 2008."
Brinker turned out to be 100% wrong as the S&P 500 index fell like a rock to a low of 666 before turning and reaching the 1600s years later.
If the S&P 500 makes a new, record high without testing its August 2015 lows, then Brinker will brag he remains fully invested. Of course, he's been "fully invested" since March 2003 with no changes to his asset allocation since then.
Do you remember the days when Bob Brinker called Intel (INTC Charts & Quote) his "Favorite trading stock?"
I posted last week at "Good News for Intel Stock"that I bought some Intel for $25.
During the mini "Flash Crash" on August 24, 2015 I got some shares of Intel for $25.00 using a "Buy Limit Order" I had placed some time ago just for for this sort of event. At $28.41 today, Intel is up 14% already.
Today we had some nice "follow through" with the S&P500 (see 2 minute chart below) that makes me think anyone who was waiting for a "test of the lows" to pick up cheap stocks is out of luck.
If you had cash you wanted to add to the markets, hopefully you used some at the lower prices we saw during late August.
I'm sure happy with my purchase of Intel that is up almost 20% already! This could be good news with semiconductors and semiconductor capital equipment stocks taking the leadership roll after this correction. During the downturn, I added to several semiconductors and semiconductor capital equipment stock positions in my Newsletter Explore Portfolio. Some are up considerably while others are just up a fraction thus I BELIEVE it is not too late to buy.
All three hours of the Sunday, June 21, 2015 Moneytalk with Bob Brinker show are now available. Scroll down for links to listen to the show live when it is next on the radio waves.
Moneytalk with host Bob Brinker podcasts are now available for free. Listen now by clicking the links or right click and save the mp3 file to your hard drive and listen later.
Bob warned of the danger or raising rates "too quickly" which would make him a "rate dove" because the "rate hawks" have felt rates have been too low for too long. Bob also said the language of the statement was most important and he didn't expect the FOMC to change rates at this meeting. Bob thinks rates could stay unchanged until the "Autumn season." Today Fed Chair Janet Yellen had a press conference and explained why they left rates unchanged after their "pajama party."
This Sunday's Memorial Day Weekend show was a live. I only have links for the first two podcast hours listed below but I will post links to the other podcasts as (if) they become available. Scroll down for links to listen to the show live.
Moneytalk with host Bob Brinker podcasts are now available for free. Listen now by clicking the links or right click and save the mp3 file to your hard drive and listen later.
This Sunday's show was a live. I only have the link for the first hour podcast listed below but I will post links to the podcasts as (if) they become available. Next Sunday you can Listen Live to Moneytalk with Bob Brinker at:
Moneytalk with host Bob Brinker podcasts are now available for free. Listen now by clicking the links or right click and save the mp3 file to your hard drive and listen later.
Hour 1: In the monologue, Bob Brinker discusses the Greek bailout.
Bob says Greece got $123B 5 yrs ago, another $146B 2 yrs ago for a total of $269B.
Now Greece needs more money but does not want to cut government payments to Greek Citizens.
Bob told callers they should not pay off 3% home loans. (I agree with this and have advised my subscribers that a 3% loan for some of your net worth is a great inflation hedge, especially since the Federal government subsidizes it with tax deduction.)
42:40 Dale: Bob would hold on to I-Bonds with 1.4% base rate even though they currently pay zero for the next six months. I agree, see New Series I Bond Rates
45:20 Deborah: Bob said paying $600 a year to get help for managing a $200,000 portfolio at Vanguard is fine with him. (The core portfolio funds in my newsletter are similar to what Vanguard will recommend and it only costs $150 a year!)
Bob Brinker used to talk about Series I Bonds on the radio but he never added them to his model portfolios or list of recommended individual issues that he used to recommend things such as Gold via GLD before the price of gold collapsed. It is too bad as I hold some I bonds from 2001 with 3.0% base rates. That means if inflation is 1.5%, those iBonds pay about 4.5%!
The Bureau of the Public Debt on May 1, 2015 announced earnings rates for Series I Savings Bonds and Series EE Savings Bonds, issued from May 1, 2015 through October 31, 2015. I bond fixed rates are determined each May 1 and November 1. Each fixed rate applies to all I-bonds issued in the six months following the rate determination. The Current I Bond Composite Earnings Rate is 0.00%. That is ZERO, squat, nada, nothing! Obviously, these CDs are much better:
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For more about how I Bond Rates are calculated, see
Bob Brinker talked about Vanguard's Ultra Short Term Bond Fund. This is a new fund from Vanguard that they announced on November 24, 2014. Key features:
The new fund, which is scheduled to launch in early 2015, will offer investors low-cost exposure to money market securities and high-quality short-term bonds* with an average estimated duration of one year.
However, the fund should not be viewed as an alternative to money market funds, which seek to offer a stable $1 net asset value.
Unlike a money market fund, Vanguard Ultra-Short-Term Bond Fund will have a fluctuating net asset value and subject you to principal risk.
Expense ratio as of 02/10/2015 is 0.20%
SEC yield as of 02/13/2015 is 0.00%(yes, ZERO!) It just started Friday so it may have to buy some bonds and subtract the management fee before it can calculate a higher yield.
Currently (2/16/15) you can get 1.00% at two banks that offer FDIC insurance. This rate tool helps find the best rates for savings accounts:
Due to the risk to principal if rates go up this year, I'd go with an FDIC savings account at 1.00% instead. If your cash is in a Vanguard IRA, perhaps you can move your cash out of Vanguard and into an IRA at one of these banks to get the full 1%.
