Tuesday Outlook: Meredith's Rally

July 13, 2009


Meredith Whitney, one of Wall Street’s new rock stars, has seen the light and in a “if you can’t beat ‘em, join ‘em” moment, put a buy rating on Goldman Sachs (GS) saying, it’s a buy in a bear market. Who can blame her? The company runs the US economy and so many confirming and negative articles are now appearing. The latest came from Rolling Stone and it’s hard to argue with the objective analysis and conclusion unless you’re just a shill for Da Boyz. Does anyone care or notice? It’s not popular to be a Cassandra on Wall Street.

As I wrote to my subscribers over the weekend, the bullish bias is ever present. Investment managers and trading desks are looking for reasons to buy at all times. You get light volume in the summer and it doesn’t take much to stampede the herd.

That said, markets exploded higher after her buy recommendation causing a short squeeze, relieving recent short-term oversold conditions. Volume was July-light while breadth was overwhelmingly positive.

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The McClellan Summation Index didn’t bat an eye today and continues its descent.








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