Brandon

Daily Market Outlook: Early Indications Are for a Modest Rebound

It appears policymakers including the fed are inclined to watch and wait. They will step in when they feel that absolutely have to but otherwise they'll remain on the sidelines.

In my opinion this almost guarantees a further 20% drop in the S&P from the old lows. The rate of bad news will begin to slow, but with a lack of good news to drive the market, it will slow it's decent before rebounding in a huge way.

That's the tough part, you shouldn't try and pick a bottom but waiting for a pop is going to cost you huge when the pop has all of this current liquidity behind it. It's tough out there.

An Optimist Looks at the Market

Everyone being negative does not signal a market bottom. What signals a market bottom are research reports that show how oversold certain stocks are with math that makes sense. As yet, I haven't seen a single analyst write anything concrete displaying nice value in any of the major financials.

I sold everything I had when the Nasdaq was at 5100. Why? Because there were analysts starting to write reports like, "XYZ company would have to have 300% growth for 15 years before their P/E ratio would be 30"

Inotherwords, this market needs more certainty. There are risks all over the place that cannot be easily calculated. Apple is a case and point. How much will Mac, Ipod, Iphone, Itune sales be hurt by the economic slowdown we're in? That's an unknown, and just like people are willing to pay a premium for log term growth visibility, the reverse is true for unknowns.

This is a difficult market. There's no doubt about it.

Dow 30 Price Targets - Too Much Optimism?

Citibank and these other companies need to figure out how much the crap on their books is worth. That's It.

Predicting the Financial Sector Rebound

There's one major problem with your thinking. No one seems to know what will happen next including the companies themselves. Even Citibank doesn't know exactly what some of its assets are worth. How can anyone be a buyer of this stock with that in mind?

Normally when a company gets destroyed like this, value investors can figure out the book value of a company and assign a fair value, in their eyes, to a stock. How can you do this with Citibank?

The bottom line? Citibank could be wildly undervalued or wildly overvalued. That's an awful amount of risk long or short.