Bob Brinker Fan Club Market Update - DOW down 19%

Bob Brinker has remained bullish and fully invested since March 2003. According to Bob Norton's June 21st "Bob Brinker Shadow Stock Market Timing Model," the model remains bullish as it tests recent March lows that were 20.2% off the all time highs.

A year ago, Bob Brinker wrote (see July 7-8, 2007 Recap) there is "no risk" of a bear market occurring this year.

As of today, the Dow Jones Industrial Average (DJIA or DOW) is 19.1% off its all time, October 2007 high on a closing basis and 19.8% off its overall all time high. Bob's "Bad News Bears" are close, but still no cigars.

Market Statistics for 06/26/08

S&P 500 Chart (Using Intraday prices):

Last Market High 10/11/07 at 1,576.09
Last Market low 03/17/08 at 1,256.98
Current S&P500 Price 1,283.15
Decline in Pts 292.94
Decline in % 18.6%
Max Decline 20.2%

This means the correction from intraday high to intraday low is 20.2% and we are currently 18.6% off the peak.

The decline in the S&P500 from the high to the low on a closing basis is 18.6%

DJIA Chart (Using Intraday prices):

Last Market High 10/11/07 at 14,279.96
Last Market Low 06/26/08 at 11,453.42
Current DJIA Price 11,453.42
Decline in Pts 2826.54
Decline in % 19.8%
Max Decline 19.8%

This means the correction from high to low has been 19.8% and we are currently 19.8% off the peak.

The decline in the DOW off the high on a closing basis has been 19.1%

NASDAQ Chart (Using Intraday prices):

Last Market High 10/31/07 at 2,861.51
Last Market Low 03/17/08 at 2,155.42
Current NASDAQ Price 2,321.37
Decline in Pts 540.14
Decline in % 18.9%
Max Decline 24.7%

This means the correction from high to low has been 24.7% and we are currently 18.9% off the peak.

The decline off the high on a closing basis has been 24.1%

From Bob Brinker's Asset Allocation History

June 2007 Marketimer: "In our view, the valuation based secular bear market that was established following the March, 2000 closing high for the S&P500 index (1527.46). and following the January, 2000 closing high for the DJIA (11723), reached its conclusion on June 13, 2006 at the bottom of the mid-term off-presidential election year correction."

Excerpt from Mark Hulbert's June 2, 2008 Marketwatch article:

"Bob Brinker's Marketimer: Bullish. In his most recent issue, which was published in early June, editor Bob Brinker wrote that his market timing model "remains in favorable territory as we approach the start of the summer season. We continue to expect stock prices to work higher and to achieve new historic highs in the market indexes. Brinker's model portfolios are fully invested."

From Honeybee's May 31, 2008 Moneytalk Summary excerpts:

“So what we have here basically, is an example of false prophets and it’s sad. And the reason it’s sad is the damage done. Think of the people that are looking today at the market, S&P at 1400 and they’ve been scared out of the market in the first quarter by these bears………It’s just amazing and yet these people are out there, and these people are not happy, I’m sure, to find themselves out of a rising market since March. To find themselves looking for ever lower prices when in fact we’ve had the opposite.
.
We’ve had the market rising since mid-March. It’s rather significant when you stop to think about it. If you go back to mid-March and you take a look at the S&P 500 Index since mid-March, right now you have a total return, including cash dividends of about 10 1/2%.....................So it’s fair for you to say to the Cassandras, where is that recession, where are those millions of lost jobs, where are the two quarters of negative real GDP growth? Where’s the bear market? …………The answer is, they blew it! That is the answer, they blew it. They got caught up in their own negativity and they pronounced that it was all over, it was going to spiral downward and there was no end in sight – and they got it completely backwards. Truly amazing to see, and sad to see the people that are harmed by such unjustified negativity.”

Reality:

It is nice to see what looks like the start of rotation into technology stocks in the QQQQ as it has fallen less YTD than the DOW or S&P500.

Kirk's Investment Newsletter
Click for a FREE SAMPLE issue
(should open an email window)

To find out how I've profited greatly from these difficult market conditions, subscribe to "Kirk Lindstrom's Investment Newsletter" today!

• Since 1/1/1999 through 6/1/08 my "explore" portfolio is up 199% while the S&P500 is only up 31% and Warren Buffett's Berkshire Hathaway is only up 91%
  .
• Subscribe TODAY and get the June 2008 issue for FREE!

Long Term Brinker Shadow Timing Model Update 5/1/08

We posted Bob Norton's shadow timing model update at The Bob Brinker Fan Club on May 1, 2008.

This is a Special Report by Bob Norton for the Bob Brinker Fan Club.

Bob Brinker Shadow Stock Market Timing Model Update

Bob Norton has udated the "Bob Brinker Shadow Long Term Stock Market Timing Model" and reports it "remains in favorable territory as we move into February, 2008."

This is a "A Special Report" by Bob Norton for Bob Brinker Fan Club readers. You can read the whole report here.

The "Shadow" Long Term Stock Market Timing Model now has 3 bullish indicators and one neutral.

Bob also swrites:

• "I believe we are in the process of forming a bottom in the S&P, possibly within the general level of 1275-1300. The fact that we are presently at 1395 is great news, but it would seem too easy to conclude that we would move straight up to the mid 1500s without some probing and testing of the recent bottom. Watch for a test of the 1275-1300 level. Hopefully selling pressure will be exhausted, and will confirm the march toward the mid 1500 recovery area later in the year.Perhaps Bob Brinker may issue yet ANOTHER buying opportunity in this retest area!"

I wrote:

• It is a coin toss at best. If you study Brinker's "gift horse" and "MOABO" buy levels through history, about half of them hit and half miss. Bob Brinker issued a buy under 1380 in 2007 after the market rose above that level to go on and make new highs. When the market was in the mid 1500's without a drop again below 1380, Brinker raised his lump sum buy level to the"mid 1400's. After that, the market crashed to the "low 1300's or about 18% from intraday peak to bottom, so far. Brinker took that mid 1400's buy level off via a special bulletin when the market was at 1325. At that price, he said to once again dollar cost average while he attempts to "identify a bottom." I prefer to use asset allocation which had me taking profits when the market was in the 1500's and has had me buying stocks these past weeks at lower than current prices.

This is a "A Special Report" by Bob Norton for Bob Brinker Fan Club readers. You can read the whole report here.

Read Bob's full report to see if you agree with his conclusion and update on the four basic model indicators:

• Valuation


• Monetary


• Sentiment


• Economic Cycle

Then give Bob your feedback on this in our Bob Brinker Free Discussion Forum at facebook's "Investing for the Long Term" group.

If you want updates on what Brinker is saying on Moneytalk delivered to your email box, often within 24 hours after Sunday's show, then follow the instructions at the Bob Brinker Fan Club.

Click Bob Norton for more articles by Bob Norton.

==>Highest Yield CDs with FDIC <==

Bob Brinker Shadow Stock Market Timing Model Update

Bob Norton has udated the "Bob Brinker Shadow Long Term Stock Market Timing Model" and reports it "remains in favorable territory as we move into the month of January 2008. "

The "Shadow" Long Term Stock Market Timing Model now has 3 bullish indicators and one neutral.

This is a "A Special Report" by Bob Norton for Bob Brinker Fan Club readers. You can read the whole report here.

Read Bob's full report to see if you agree with his conclusion and update on the four basic model indicators:

• Valuation
• Monetary
• Sentiment
• Economic Cycle

Then give Bob your feedback on this in our Bob Brinker Free Discussion Forum at facebook's "Investing for the Long Term" group.

If you want updates on what Brinker is saying on Moneytalk delivered to your email box, often within 24 hours after Sunday's show, then follow the instructions at the Bob Brinker Fan Club.

Click Bob Norton for more articles by Bob Norton.

Bob Brinker's LTSM Timing Model Update for December 2007

The Bob Brinker Shadow Long Term Stock Market Timing Model remains in favorable territory as we move into the month of December.

Article by Bob Norton, posted Saturday Morning on the Bob Brinker Discussion Forum at Facebook's Investing for the long term group.

ECs (Editor's Comments): by Kirk Lindstrom

Valuation:

Market close 11/30/07 S&P 1481

S&P earnings projection for 2008 is 102.86 as of 11/28/07.
p/e based upon S&P 1481/102.86 = 14.39

S&P Investment Policy Committee's most recent 2008 price target of 1650 presently yields a p/e of 16.04.

I anticipate that the S&P IPC may lower their forecast between now and the end of the year. On 11/26/07, one of my valued sources from which to make comparisons with Bob Brinker, Evergreen Investments, have lowered their 2008 guidance of S&P earnings from $100 x 17 =1725 down to $98.50 x 16.5 = 1625.

The Morningstar Valuation Graph has the market in deeply undervalued territory.

The NYSE 30 Day Advance/Decline Oscillator and the NYSE New High/New Low Ratio (Marketgauge.com) both indicate extreme oversold conditions.

• EC: This chart shows the number of NYSE stocks that are making new 52 week lows (red spikes) plotted with the S&P500 in black. You can see from the chart that spikes above 450 new lows are fairly rare. On Nov. 9, 2007, the NYSE made a second spike above 450 in just a few months!

Yesterday the 10 year Treasury closed at 3.97%, falling further away from the June 2007 level of 5.25%. Downward pressure on yield is a result of the flight to quality coming from the sub-prime mess, along with as-of-yet unsubstantiated recession fears.

The ratio of the 10 year 3.97% divided by the inverse of the S&P p/e (1/14.39) yeilds .572..... confirming that the market is substantially undervalued. In the December 3rd edition of Barrons, Don Hays of Hays Advisory Group said that this is an excellent indicator in that it shows that "money goes where it is treated best"

This indicator is BULLISH.

Monetary:

As of November 12th, M2 liquidity came in at 7403/6945 (year ago) =
6.59% increase minus 3.50% (headline inflation) = 3.09 inflation adjusted increase. M2 expansion is slipping against the projected 2007 GDP growth rate, but is still marginally ahead of 2008 consensus forecasts of 2.0 - 2.5% (Northern Trust, however, lowered its estimate to 1.7% earlier this month).

M2 growth trend needs to be monitored closely going forward, especially considering the Federal Reserve's task of balancing duel concerns over the housing-related slowdown with the recent uptick in headline inflation.

Headline inflation has jumped from 2.8 to 3.5%. Core CPI is slightly above the Federal Reserve comfort zone at 2.2%.

The PCE has risen to 2.9 from 2.4%, with the all-important Core PCE now standing at 1.9%.....still withion the 1-2% Federal Reserve comfort zone.

For the time being, core PCE is well behaved.

This indicator is BULLISH

Sentiment:

AAII bullish readings have fallen to 28.6 (12/2/07) from the 11/2/07 reading of 44.7

• EC: AAII: American Association of Individual Investors Bull/Bear Index: Charts and More Info

Investor's Intelligence Survey (bulls/bulls +bears) 11/20/07 from Market Harmonics stands at .643. This provides continued relief from the worrisome readings of over .70 which were consistent throughout the month of October.

• EC: Investors’ Intelligence Bull Bear survey: Charts and More Info

A recent reading of the moving average of the 60 day put/call ratio stood at .999... still showing sufficient negativity in the investment community.

• EC: The 60 day moving averate of the Put/Call ratio was under 0.50 in early 2000 when Bob Brinker's timing model signaled sentiment was too bullish. A reading of 0.50 or less means two bullish call options were bought for every bearish put option.
  
• chart: something wrong clicking the chart so I will upload it here later.

The ARMS Index of declining versus advancing NYSE issues has showed continuing improvement from the highly elevated readings of November 12th. Further improvement back toward a neutral stance is desired.

This indicator is BULLISH

Economic:

The November 30th 3rd quarter GDP revision of 4.9% yields an average GDP growth rate of 3.3% for the first 3 quarters. Still, there is widespread concern regarding the potential for a serious slowdown in the 4th quarter.

ECRI Forcasting (Lakshman Achuthan) noted on 11/30/07 that deterioration in their indicators continues, but that they still fall short of a recession call.

• EC: You can ask questions of Lakshman Achuthan in our Facebook discussion forum "ECRI Data (Economic Cycle Research Institute)"

Paul Kasriel is the director of economic research at The Northern Trust. They publish an excellent monthly report entitled "U.S. Economic and Interest Rate Outllook". Northern Trust has also been reluctant to make a recession call thus far, but their work suggests that a 2008 recession may be close to unavoidable. Their 2008 GDP forecast has been reduced to 1.7 from 2.0%. They make the case that the Federal Reserve needs to get short rates down to the area of 3- 3 1/2 % by mid 2008. But they also state that the Fed's hands may be tied by less than cooperative future inflation data. This report is definitely worth reading.

For the present time, a slow growth economy still wins out over recession as we begin 2008.

This indicator is BULLISH, but may be deteriorating toward a neutral stance. Federal Reserve policy announced at the upcoming December 11th meeting and incoming data during this month will play an important role in clarifying the direction of this indicator going forward.

Summary comments:

All four indicators are bullish, but with the economic indicator under some pressure. The immediate outlook for inflation still looks benign, even with the elevation in the headline number.

The falling dollar is viewed by many as making U.S. exports attractive to foreign purchasers and may provide a partial offset to future lower domestic spending caused by the "taxing effect" of higher energy prices. If higher energy prices do begin to leak into the core PCE, as I speculated about last month, then we may need to start discussing the possibility that a watered-down version of stagflation may set in.....but certainly nothing like what happened back in the 1970s.

As we close out 2007, the October 9th S&P high of 1565 was less than 1% (high or low) from the predictions made by Bob Brinker, the S&P Investment Policy Committee, and other sources which I monitor. It will be interesting to see how right they are next year!

That's it for now. As always, your insight and comments are welcomed and greatly appreciated!
Bob Norton
(more Posts by Bob Norton.)

---

EC: Great work Bob! Thanks.

Bob Brinker's LTSM Timing Model Update for November 2007

Bob Norton's "shadow" Update of Bob Brinker's Long Term Stock Market Timing Model (LTSMTM) has been posted at the "Bob Brinker Fan Club." Here is the URL:

• LTSMTM UPDATE November 6, 2007

Bob writes: "My version of the LTSMTM remains in favorable territory as we move through the month of November." Read his full report to see if you agree with his conclusion and update on the four basic model indicators:

• Valuation
• Monetary
• Sentiment
• Economic Cycle

Then give Bob your feedback on this in our Bob Brinker Free Discussion Forum at facebook's "Investing for the Long Term" group.