THE MOST PRECARIOUS BUYING OPPORTUNITY OF 2013 IS HERE
We will begin with the most obvious fact: It is October. We will continue with the next obvious fact: We are in the midst of a governmental shit storm that is turning into a game of who can hold their breath the longest. We all know that eventually somebody will either give up or pass out, leading to some kind of resolution. The question that should be of concern to every investor and for that matter, every American, is the amount of damage that will take place in the markets and economy, in the meantime.
I will make it clear that I am extremely bullish for Q4. In fact, to zoom in even further, I am extremely bullish for October. The problem is that I believe we are in a precarious enough position in the markets and news cycle that we are looking at a potentially brutal slip before we see the bounce. I don't necessarily want to be buying into any kind of slip before a base is observed. There is no need to be the first man in at the bottom. In my nearly 20 years of watching bottoms take place, I have not witnessed one that did not give investors the opportunity to get invested once it took place. Everyone will have their chance to get allocated if they remain patient. In the meantime, defense should be at the forefront of one's strategy, as opposed to catching the bottom tick.
Over the past couple of weeks in my weekly review, I have been discussing the possibility of downside for the markets. Just this past Sunday, I pointed out the 1660-1670 level as a point from which we can stage a significant rally. We got the first hint today that the markets are also looking at the 1670 level, as the low of the day from which a nice rally took place intraday was 1670.36.
What can open Pandora's Box for the bulls is described in the chart of the S&P from today:
click chart to enlarge
SPX
Perhaps all of this analysis rooted in caution will be all for not when we get a resolution this weekend and the market can look forward to earnings. That's the hope. But, unfortunately, I don't know of many investors who have thrived on hope. In fact, it is quite the opposite.
