BOB BRINKER'S STOCK MARKET OUTLOOKCaller: This caller is bearish on the stock market and wanted to know why Bob wouldn't recommend going short on the market right now. Bob said if he thought the market was going down, he would most definitely recommend defensive action. Bob asked the caller why he was bearish. The caller cited a few reasons, including that he expects another interest rate hike in January, our deficits continue to grow, and the U.S. economy doesn't look that strong. In addition, the caller noted that the Dow seems to keep bumping up against 11,000, but failing to break through. Bob didn't address the caller's specific comments, but did say that he was not bearish right now and that in his opinion, the outlook for the market is NOT bearish.
WHAT TO DO WITH NEW MONEY EARMARKED FOR THE STOCK MARKET
Caller: A caller asked Bob whether he should go "all in" to a stock market mutual fund with cash he had on the sideline. Bob said the last time he recommended going all in with excess cash was when the S&P 500 was below the 1180 level. Bob said he had that recommendation on in September and October. Bob noted that there were six separate closes when the S&P 500 was below that level -- all between 1176 and 1179. Since then, we have had a terrific run in the stock market. Bob said he has never had a preference for chasing rallies. Now that the market is trading close to the recovery high, Bob said he is taking a dollar cost average approach to new money.
As this chart shows, dips below the 200 day moving average have provided excellent buying opportunities for those who have not followed Bob Brinker's advice to be fully invested.
Bob Brinker Fan Club
I recently emailed members of the Bob Brinker Fan Club my chart showing a plot of the "bulls over bulls plus bears" Investor's Intelligence survey going back to 1998. There are sharp declines in bulls over bulls plus bears every time the market goes below the 200 day moving average and makes a tradable bottom. Since March 2003, these sharp declines have been reversing on a rising trend line clearly shown on the chart I emailed. This trend change has signaled to us a tradable market bottom. Since I take profits in rising markets, I (and my subscribers) had funds to redeploy on these bottoms. The market rallied significantly after I sent out that chart showing sentiment holding support. If you would like a copy of the latest "bulls over bulls plus bears" chart (in pdf format) then sign up to get on the mailing list at the Bob Brinker Fan Club and ask me to send it to you, for free.
