Technicals and Fundamentals Could Converge

By: Chris Ciovacco | Thu, May 27, 2010
Print Email

The bearish outlook is well documented with extensive coverage of the problems in Europe and the "dawn of the next credit crisis". We understand and respect the bearish case. We also understand and respect the seriousness of the debt problems in Europe. However, since the market's longer-term stance remains positive, it is also reasonable to assume the problems of the day may not yet derail the bull market. During corrections, it is nearly impossible to conceive stocks will ever go up again, much less have any chance of rallying to new highs. With all the bearish views, below we present a contrarian scenario that could lead to a better than expected rally in stocks:


Bullish Outcomes Probable - Bearish Outcomes Possible

Is it possible that none of the above occur in the coming weeks and months? ANSWER: Absolutely, positively yes - none of it may happen. Stocks could make lower lows and a correction could go on for a few months. Worse yet, stocks could shift into a full blown bear market in the coming weeks and months. This exercise is meant to counterbalance all the negativity that has ruled the mind of the market in recent weeks. Just when we think nothing good can happen and stocks go nowhere but down, they often surprise on the upside. The best thing we can do is to continue to pay attention with an open mind about bullish and bearish outcomes. The evidence, while significantly weakened in recent weeks, continues to support the bulls for the time being. Until that condition changes, we will continue to give the bull market the benefit of the doubt. Having the S&P 500 trade over 1,220 seems nearly impossible right now, which makes it more probable than we think.

Additional comments can be found in Short Takes.

 


 

Chris Ciovacco

Author: Chris Ciovacco

Chris Ciovacco
Ciovacco Capital Management

Chris Ciovacco

Chris Ciovacco is the Chief Investment Officer for Ciovacco Capital Management, LLC. More on the web at www.ciovaccocapital.com.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors and tax advisors before making any investment decisions. Opinions expressed in these reports may change without prior notice. This memorandum is based on information available to the public. No representation is made that it is accurate or complete. This memorandum is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. The investments discussed or recommended in this report may be unsuitable for investors depending on their specific investment objectives and financial position. Past performance is not necessarily a guide to future performance. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. All prices and yields contained in this report are subject to change without notice. This information is based on hypothetical assumptions and is intended for illustrative purposes only. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION CONTAINED IN THIS ARTICLE.

Ciovacco Capital Management, LLC is an independent money management firm based in Atlanta, Georgia. CCM helps individual investors and businesses, large & small; achieve improved investment results via research and globally diversified investment portfolios. Since we are a fee-based firm, our only objective is to help you protect and grow your assets. Our long-term, theme-oriented, buy-and-hold approach allows for portfolio rebalancing from time to time to adjust to new opportunities or changing market conditions.

Copyright © 2006-2014 Chris Ciovacco

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/