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Wednesday, January 21, 2009

Bob Brinker's Bear Market Bottoms

Bob Brinker announced a special bulletin on his website, on January 15, 2009. Some of you have asked if he has called a new market bottom and issued a new buy signal.

If Brinker did call a new market bottom on January 15, 2009 it would be the third one since the start of the mega-bear market just a year ago when Brinker's buy-in level was at S&P mid-1400's.

Brinker's first bottom call was at the March, 2008 lows, when he said the market had bottomed and was "attractive for purchase" at mid-1300's. On Moneytalk in April 2008, Brinker said he was buying in the low-1300's:
Caller John said: “I took your recommendation, Bob.. When it was below the 1300’s I added…….I’m just glad I got you, your son and the Marketimer on demand.”

Brinker replied: "And just for the record, I’m right with John. I was the exact same thing that John was doing. When we saw that weakness on the correction test into the low-1300’s and that very, very minor weakness that we had just below that level for a very short window of time, I was doing the same thing that John was doing – which was adding to positions."

Brinker's second bottom call was September 3, 2008. Brinker said he thought there might be "additional testing of the July 15 closing low," but in his view "the S&P 500 low-to-mid 1200's range is an attractive area for equity purchases." (Brinker rescinded this advice just two weeks later, and he has recommended dollar-cost-averaging since then.)

Now here we are in January, 2009 and some are speculating that Brinker has found a new bottom and issued a new buy signal. Well, he is not alone if he is thinking that the market is in a bottoming process and testing the November lows.

Mark Hulbert wrote an article for Marketwatch on January 15th titled:
"No Key Reversal." Hulbert thinks that the bear market bottoming process has further to go.

January 17th, David Korn said that he thinks a good entry point is 750-800:
"There was some talk on Wall Street about a retest of the lows occurring Thursday. The S&P 500 recorded its closing low on November 20, 2008 at 753.44. Now other than that day, the lowest close for the S&P 500 was the day after (November 21st) when it closed at 800.03. We got pretty close to that on Thursday, when the intra-day low was 817.79, before it closed at 843.74. I prefer a retest where the new low is breached, on lower volume. But if you are looking to buy, I think a good long term entry point is between 750-800 in the S&P 500."

It's important to remember that Brinker never recommends selling the market into weakness. Brinker reiterated this to a caller on Moneytalk just 3 months ago. September 27th, Brinker said: "Actually Ken, it's not my opinion that you should be selling stocks right now. I don't have a recommendation to sell stock right now. And if I did have a recommendation to sell stock right now, you would know about it. No, I do not have that recommendation. And really, that's all I can say. We have not, we have not issued a sell signal on this market.

In the January 6, 2009 issue of Marketimer, Brinker said that he expected the 750-850 November lows to provide support for completing the bottoming phase.

Dixiegeezer took this beautiful picture:


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