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IS THE SEASONAL DECLINE IN STOCKS DELAYED?

19 October 2009 by TPC 4 Comments

Predictions for a September and October swoon in the stock market are proving to be greatly exaggerated (yours truly is certainly guilty of expecting a September swoon), but according to Bloomberg and Bank of America analyst Mary Ann Bartels, the seasonal decline is simply being pushed back. Using the foundation for the 1939 rally and the 1975 rally in stocks, Bartels believes the markets are due for a 10%+ correction and potentially as much as a 25% correction before creating a foundation for a 2010 recovery rally.

Source: Bloomberg

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4 Comments »

James said:

I have been saying that I am getting a little more bearish for the first time. That doesn’t mean I think people should go all out and short and especially not buy puts. Remember, in addition to earnings, Q3 GDP will be announced, and this is bound to pleasantly surprise. I think if we have a slight correction, like 3-4% it is a buying opportunity again for a 10% rise in markets. The real danger for longs come in Q4. Quantitative easing is ending soon, more companies will begin missing, there will be less zeal in burned out shorts, and there will be MORE zeal for buying into Q4 earnings. Just my opinion! I still wouldn’t short here unless you just average up. But if you are using options I would definitely not short for a big drop YET.

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TPC Reply:
October 19th, 2009 at 9:45 PM

Shorting into earnings season will be dangerous. The owners of stocks need a damn good reason to sell and that reason simply does not exist right now….

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James Reply:
October 19th, 2009 at 9:55 PM

You are right it doesn’t RIGHT NOW. I wouldn’t short right now. There will be a pretty good time window to short sometime this year though after another large run up.

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# 19 October 2009 at 9:43 PM

Sheramn McCoy said:

In the interest of truth in advertising, you might change the name of your site to “Unpragmatic Anti-Capitalist” since you seem to have masochstic desire to not participate in the greatest (mini) bull market in 50 years. I have no doubt that you are intellectually superior. but when do you plan on making any money?