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I've changed my mind, again...



September 14, 2009 – Comments (9) | RELATED TICKERS: CNO , GTN , MNI

It has been 4 weeks since my last prediction (made on August 14, 2009 - link will be posted at the end of this post), in which I predicted that the market will continue to go up for another 2 months (or 8 weeks).

I hope you agree that so far I was right (market did continue to go up these past 4 weeks).

(And once you see the link, and in it the link to my initial prediction, I hope you will agree I was right for a while now).

However, now I've changed my mind, and I think that we only have 2 more weeks left (instead of 4) before the market starts going down again. And when I say down, I don't mean nothing cataclysmic, just a healthy correction.

So in my opinion, this coming week, and the one after that, will still be up weeks (S&P's closing price at the end of Week 2 will be higher than today), followed by a correction which will end somewhere between October 26 and November 6 (2-weeks span). In other words, I'm saying that the correction (once again: correction will start 2 weeks from now) will last approximately 5-6 weeks.

After that, shortly before or after November 6, the market will start its march up again, and will go up for good 5-6 weeks. Of course, the S&P's closing price at that time will be higher than today (my guess is: DOW around 10,500, S&P around 1,200). I'm specifying this as this will be the last (great) opportunity to profit this year (hint: buy stocks that are leaders now, but will fall hard during correction. You'll double your money, at least.)

And that will be it for this year. At that time, media (same media that was sceptic all this year) will be celebrating a great year for the stocks, will be listing this year's winners with huge returns,... basically will be doing everything (but not on purpose) that will entice the average small investor (also called: show-me-good-news-investor) back into the market.

Of course, a frustrated small investor (who will be kicking himself/herself for missing this year's rally) will jump back in with both feet.

Unfortunately, 2010 will not be near as good to the stocks (and brave investors) as 2009 was...

There will be plenty of opportunities for skillful traders, but the small investor will once again be aking herself/himself: "Remind me, why do I invest in stocks...?" 

(But there will be some good news in 2010 for those investors: The economy will improve...) 


link to my previous prediction: I've changed my mind

If interested, also see this: Look at this chart

9 Comments – Post Your Own

#1) On September 14, 2009 at 1:09 AM, awallejr (52.41) wrote:

Well basically you are describing an overly expected correction followed by a year end rally.  Personally I think you are right, but time will tell.

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#2) On September 14, 2009 at 1:11 AM, checklist34 (98.91) wrote:

i think that the average small investor really isn't any worse at this than the average mutual fund investor.  just a thought.

i think your comment of each time the market tanks and turns sour a bit...  buy what tanked the most during the downturn (selectively, of course, picking companies you like etc etc) is a good idea.  Because part of why they tank is short interest, which leads later to a short squeeze, blah blah.  It sure worked for me this last time around. At the july lows i was roughly 2x my money on self-invested stuff, 1.8x my money overall.  I am over 3x my money overall now (all self invested since july) and 3.something my money on self invested funds ...

I hope you're right, dragon, a scenario like that would work well for me and my selection of hedges and stocks.  ...

Doug Kass from and seabreeze partners is quite bearish, calling a top at S&P 1038 and standing by his call that we're basically at the top still.  More than just he at are bearish...  it must be 3:1 bears to bulls there, maybe much more than 3:1.  

bearishness is having a comeback in the blogosphere

I still think 11-1200 is fari value on the S&P right now, and i think we touch fair value this year, but I also think that the market doesn't go significantly over fair value for some time as the epic bear market that began in 2000 still has some legs.  

i guess my view and yours aren't so different, save that I always assume that I don't konw spit about how the market moves in the short term.  

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#3) On September 14, 2009 at 1:24 AM, awallejr (52.41) wrote:

Watch the panic rise as the market does correct (and it really needs to in my opinion, tho not steep like some suggest, 5-10% tops).  Bears will be all out shouting doomsday. Take that as an opportunity to add positions.  I plan to.

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#4) On September 14, 2009 at 6:37 AM, dragonLZ (89.74) wrote:

check, I gave it two more weeks just because at the beginning of September everybody thought correction has already started (after a 186 points DOW drop on Sept. 1 + 3 more red days).

I don't know, I might be overly optimistic (disclaimer: I always was).

Also, I think toward the end of this month, people will start seriously thinking about the next earnings announcements. Expectations will be low (based on the assumption that market is way overbought, economy still hasn't improved,...same old story...), and I also think that a few first announcements will be nothing to write home about (market will continue falling thru first few announcements).

At that time, just as awallejr said, bears will be out and shouting: It's our turn now...,

Should make it easy to profit once again as soon as we get a few first earnings surprises...


#22) On September 03, 2009 at 10:25 PM, dragonLZ (98.46) wrote:

IMO, market will be higher at the end of September than it is now. I know it sounds stupid (after only 4 days in red), but I think today was the first day of the new run up. I don't think it's gonna be a huge run, but a nice one (Disclaimer: I'm no expert).


#23) On September 04, 2009 at 9:28 PM, dragonLZ (98.46) wrote:

With the market up more than one percent today, I feel very good about the call I made yesterday that we are in for another push higher. Good 3 weeks is what I'm thinking. We'll see...

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#5) On September 18, 2009 at 11:11 PM, memoandstitch (< 20) wrote:

hint: buy stocks that are leaders now, but will fall hard during correction.

Isn't that the best way to lose money?

Should just wait and buy during the correction.

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#6) On September 19, 2009 at 11:29 AM, dragonLZ (89.74) wrote:

memo, very smart, very smart... :)

Read now that paragraph again and see what I said. Saying "buy stocks that are leaders now" doesn't mean "buy now". Make a list and wait for the correction I was talking about.

Read also what checlist said in his second paragraph. He got it...

Good Luck!

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#7) On September 22, 2009 at 1:32 PM, EyeT4Me (34.57) wrote:

So in these next few weeks when the bears come out again, what does a small, inexperienced investor like myself do with the stocks I have purchased?  I've only been at this since May, but have made a surprising amount of money...which will vaproize unless I sell.  I never can figure out when to sell.

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#8) On September 23, 2009 at 8:42 PM, dragonLZ (89.74) wrote:

Eye, IMO, today was the day to sell. If you didn't do it today, you can still do it tomorrow. I think (key word: think. I don't know it, just like you don't) today was the beginning of the long expected short-term correction.

p.s. See this

Disclaimer: This is just my honest opinion. However, I might be very wrong so make your decision based on your own research, gut feeling, etc. Good Luck!

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#9) On September 23, 2009 at 9:40 PM, simplemts (< 20) wrote:

I had a feeling today was a top too.  I sold out all of my EWZ at a 125% gain and will buy back in when it is under $60.

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