bear market is over

Interesting and quite surprising take from a commentator I've long had great respect for. In the months leading up to the end on the 2007 bull, he consistently predicted exactly the fiasco that unfolded ... and now, a new tone has entered into his commentary - that being - things are f#cked but from a trading point of view, capitulation has occurred and the beginning of the next bull are in place ..

He says:

September 25, 2008
Cara's Commentary & Community Chat, Thurs., Sept. 25, 2008, 7:48am ET

My take on President Bush’s State of the Union last evening: “We’re in trouble here and we need your $700 billion or more and we need it now!” This is 1-800-HELP in reverse.

What’s the public to do? They’ve never before seen a President using words like “panic” and basically begging the nation to let their elected representatives give his National Rescue Plan their immediate consent.

No, it wasn’t pretty.

One thing the rest of the world has to appreciate, however, is that, whenever pushed, Americans unite and fight. Whether he wanted to or not, Warren Buffett yesterday did just that as he stepped up with a $5 billion investment in Goldman Sachs.

America is too big to fail; pretty soon the oil sheiks of the Middle East, and various Sovereign Wealth Funds, will step up to do the same. A US depression would become a global depression. Nobody wants that.

Americans have never been pushed like this to help their country, and they will. There will be a National Rescue Plan bill worked out, probably on Sunday. Once that bill is in place, individual Americans will follow through with putting their portfolio cash to work to buy equities. I do believe the new Bull has arrived and too many people are in such an emotional state they fail to recognize the transitioning phase that started Thursday at mid-day.

I am working up a list of stocks I think would represent good value for long-term oriented portfolios. In the meantime, traders need to keep their head about them; they need to practice the time-honored saying “buy low-sell high.” Traders need to watch the price data to see which non-financial and non-consumer cyclical stocks appear to have bottomed and to put on straddles and long positions, which is a bullish bias with a measure of protection. Others should consider simply writing puts at very, very low strike prices. After a deal is struck in Washington, the first opportunity to close out long puts, do so. Then let your long calls and short puts run much higher in price.

If you happen to see a rally in T-Bill yields, and/or a drop in the inter-bank lending (LIBOR) rate, then speculators and day-traders should buy the shares of the most solid banks. But only in that case. If you happen to see both, then buy heavy (for a trade) because shorts will be covered.

Yes, America will be fine. This is a financial crisis, not a military crisis.


What you think?