The Obama Takes It Back Rally

Part of the reason the market rallied at the end of the day yesterday was because there were leaks that Obama was going to soften his language on the banks. While I would prefer that the market bottom on exhaustion with no news, I believe that the odds favor the bulls for the coming week.

Even if the market were to fall through tomorrow we would be maximum oversold heading into the seasonally strong beginning of the month. Therefore I believe it is best to get ot of the bulls way and even buy if we do get another scare this week.

As an aside, trading on Barack Obama or any other politician's rhetoric is silly. Politicians huff and puff and say what the public wants to hear, but there is rarely ever any action. The only thing worse is trading on what Jim Cramer says. At midday yesterday he declared the banks dead. They promptly rallied and are gapping up this morning. I will be at meetings all day and will try to post.

5 comments:

Anonymous said...

With a thick pencil that 1103.00-50 level is looking like an ugly fail double top (UFDT).

Bernanke confirm is last chance to blast through. Stops should take us to the much anticipated 1115 where the entire free world is waiting to sell. Don't count on it...

JD

Anonymous said...

Nice call with BRK/B. Im glad I bought some keep up the good work!

Anonymous said...

Yes, thanks for brkb!

I have a non-traditional idea regarding the period until S&P entry. The demand side is clear with inclusion into both the S&P 100 and 500. On the supply side I suspect that Berkshire's classic stockholder is a radically extreme example of a buy and hold investor. If this behavior continues thru the next 10 or so trading days, the stock should solidly outperform an average S&P new entrant during this period.

Chaos! said...

The market cap of BRK.B is far greater than the usual addition to the index. That means much more of it will have to be bought by the indexers than the other recent entrants.

Anonymous said...

Yes Chaos! 6.5 times greater. One might argue that relative to the outstanding stock there is no difference and so it shouldn't matter. But I think it does too.

Does the combination of A and B shares effect this calculation?