The Week Ahead: I Called the Bottom

The market turned in another positive week, and has offered a stealth rally for some. However, I , Markos Kaminis, recommended on the very day of the market’s bottom, to “buy the news.” Yes, I actually predicted the bottom of the market, but that was only one correct call in a series of them since I began publishing my thoughts.

Might the end truly be here for the bears? In this reactionary, counter-reactionary world, I have found criticism from both bulls and bears over the course of the last twelve months. So-called “experts" and novices alike have jumped down my throat when I prognosticated correctly ahead of the game and against the herd on both occasions.

Remember, it was I who began warning of this economic downturn as early as the winter of 2006. Then it was I again who forecast stock market recovery early this year, despite my expectations of ongoing economic softness. In fact, I called the market bottom to the day when I recommended investors “buy the news” in this article published on March 10, 2008. The Nasdaq is up 17% since its bottom on that day.

So, with all the headless chickens running around investing in stocks, I have to wonder why then investors find it logical that the even-keeled Warren Buffet is the greatest of all time? The key to successful long-term investing is in not letting emotions dictate your money flow, which is much harder said than done. Heck, equity mutual funds were still reporting outflows of capital as recently as the week before last. Meanwhile, stocks have been on the rise since March 10^th. I bet you are surprised by that news, because during that span you’ve very likely been moving your money out of stocks.

The Week Ahead

On Monday, Leading Economic Indicators for April will provide insight into just how realistic the recession scenario is. On Tuesday, State Street’s Investor Sentiment reading will be reported for May (April’s was 72.8). We may very well see an uptick in confidence, but consumer sentiment, which was reported on Friday, indicated consumers feel as bad now as they did in the early eighties. Remember though, sentiment is a lagging indicator, so that when consumers and investors think things are most dire, the economy/market is usually already in recovery.

The Producer Price Index will also reach the wires on Tuesday, but this inflation gauge is likely to offer little interest, as investors have been primed by last week’s moderate consumer price metric. We noted on the Wall Street Greek website this past Wednesday that CPI benefited from petroleum price back up that we already know disappeared in May. In any event, PPI is worth paying attention to, as producer prices continue to eventually find their way to your wallet.

The Federal Open Market Committee meeting minutes will be released on Wednesday, and the notes always offer economists material to debate with in regards to what the Fed will do next. As a result, it moves stocks, so pay attention to that on Wednesday afternoon at our website.

On Friday, we’ll see if this week’s positive Housing Starts report had a solid base. Existing Home Sales for the month of April are set for release. We theorized on Friday, in our article entitled “Housing Starts See Seasonal Impact Despite Adjustment,” that housing benefited from an abnormal current period that applied an irrelevant average seasonal adjustment. We might see the same type of positive news in this Friday’s report, so be wary when the market starts betting on housing recovery prematurely.

This week’s earnings include: Monday – Lowe’s Companies (NYSE: LOW), Excel Maritime Carriers (NYSE: EXM); Tuesday – Home Depot (NYSE: HD), Target (NYSE: TGT); Wednesday – Campbell Soup (NYSE: CPB), Limited Brands (NYSE: LTD); Thursday – Tsakos Energy Navigation (NYSE: TNP), Children’s Place (Nasdaq: PLCE); Friday – Nordic American Tanker (NYSE: NAT) and more.

Please see our disclosure at the Wall Street Greek website.

Comments

[User 143167]

It is inflation rather than housing price that kills the consumer confidence. So saying its a lagging indicator doesn't necessary mean the worst is over as you hinted. Look at the prices at grocery and the pumps.

[galewhitaker]

You called the bottom of what? Are you saying that this low volume bull trap rally was the beginning of a surging new econonmy/market. With the price of oil gushing past $129 and consumer confidence droping out of sight I suggest that the bottom is ahead of us and it may be far below your expectations. Never in history has energy been this expensive in relation to wages. With the price of crude at $129 I think the price of equities is way to expensive.

[Enochs]

Galewhitaker, I agree. We just saw the DOW drop 200pts and oil set a new high. The bottom will be seen in the next 180 day and it will take a long time to climb out.

[Enochs]

Markos, you failed badly at your attempt to "call the bottom."

[Enochs]

Ok, I just had to come back to this article and make another post....

Hey everyone, who does this remind you of?

"I called the market bottom to the day"!! I'm so smart that I scare myself......lol lol lol

Today the market almost closed below 12000 and it is still falling,,,burn baby burn!! Nobody making bold predictions now....I only hear crickets. lol lol lol

[Enochs]

Hey Marcos, we closed at 11456 today....are you going to call another low? Please! I beg you to get back up on that high horse. You looked so silly up there.

:)