I want you to think about the following statements:
- The bear market/recession is over
- No significant sell off is coming
- The economy has recovered or will soon recover
- The low at SPX 666 was the bottom
Preposterous, no?
I've said this before and I'll say it again: the ultimate contrarian trade/investment would be going long stocks for the next 1-3 years and reap the mother of all gains. It seems so absurd but I ALWAYS consider the impossible a possibility.
That being said, I do have a line in the sand that will tell me without a shadow of a doubt that we are really recovering from this mess and it's something quite simple: a rising 200-day moving average.
The importance of the 200-day MA should not be overlooked and its simplicity can be quite powerful if you're investing for the long haul. In fact, paying attention to this simple moving average could have saved you a lot of money in early 2008 when it started heading down.
The point I'm trying to make is that everyone should have an uncle point that forces them to switch camps (on a longer term basis) no matter how bad things might look.
I hate rationalizing why a market goes up/down but I have to pay respect to the buoyancy of the market particularly when we have a government that is relentlessly printing money to save the economy. At some point this fake rally will implode on itself but it is quite plausible (within the realm of possibilities) that the rally has more legs than most expect.
Please don't be caught off guard.
P.S. Still bearish but keeping an open mind.
