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
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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.
