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Wednesday, April 8, 2009

Bob Brinker "Missed the Bear in its Entirety and Was Recommending Buying All the Way Down"

Posted April 9, 2009: Bob Brinker historian and newsletter commentator, David Korn, puts Brinker's latest stock market reviews into historical perspective.

The following commentary about Brinker's Saturday opening monologue are all excerpts from David Korn's newsletter. Posted with David Korn's permission:

Brinker Comment: Bob said it is his opinion that the stock market decline in late February through early March was a direct result of bear raids into financial stocks that spilled over into other stocks. That was during a time where you briefly saw the S&P 500 dip down to close at the benchmark low of 676. Bob said the S&P 500 had strong support in the mid-700s where it had established its lows on November 20th of last year. But in late-February/early March, the market had that brief dip from the mid-700s to 676 and then it snapped right back. Bob said he thinks this dip was due to the fact that there were bear raiders at work with free reign in the market due to no uptick rule. Bob said he thinks the hedge funds were involved in this and that is what happened. The S&P 500 jumped off of the 676 level where it had spent a few days in that vicinity and then snapped back. The reality is that there was a major bear raid on the financials and they took many of the financials down to penny stock status. Not only names like Citigroup, but they took Bank of America to $2.53 a share and now it is at $7.60. That is what gave you these benchmark lows in early March that resulted from the bear raid. There is no doubt they need to bring back the uptick rule.

[David Korn] EC: Wow. This comment is interesting on so many levels, at least for a Brinker historian like me. First of all, Bob brought this up in his opening comments on Saturday's show which means he had prepared them for a wide audience. Trust me on that ­ Saturday opening monologue is big for his ratings. This didn't come from a caller sneaking in a question about the stock market. And given that I write a letter each week, it has been obvious that Bob has been avoiding talking about the stock market action lately. Unless you are a new subscriber to mine, you probably know that Bob missed the bear in its entirety and was recommending buying all the way down. His buy signals at mid-1400s, low 1300s, below 1240, and low-to-mid 1200s last year all were busts.

But then in January of this year Bob issued his bulletin feature and said he thought the low to mid-800s for the S&P 500 was yet another buying opportunity and that he expected 2009 to be significantly positive for the stock market. When Bob uses the bulletin feature, it is significant. Note I say "significant" not that "prescient". The bulletin feature has been used for a great call (March 2003 buy signal) and some horrible calls like the QQQQ in 2000. (Although the value of the March 2003 buy signal was rendered worthless insofar as Bob's model portfolios are concerned since the market went on a roundtrip and ended up below that level in March 2009).

But I digress. The important point is that Bob was viewing the low-to-mid 800s as a good area for lump sum purchasing into the market. But then the market tanked again and went below those levels. Down from the 800s to the 700s. Then in his March 5, 2009 Marketimer, Bob said he was looking for a new market bottom. Well, he missed the March 9th inflection point of 676 in the S&P 500 (See my March 9th Special Alert which detailed the positive divergences in the market internals). And then he really clammed up for over 3 weeks until this weekend.

So, on Saturday Bob refers to the 676 on March 9th as a "benchmark" low. Thus, it would seem that Bob is now saying that he missed identifying the low that he said he would try to do in his March 5th newsletter. The blame for missing it apparently goes to the bear raiders. Maybe, but that is still just an excuse. After all, Bob was blaming the price of oil for the stock market declines last year, but gave up on his stock-inverse price of oil theory when it didn't follow through. There have been bear raiders all along and it is not as if the financial companies weren't giving traders an excuse to sell. And the uptick rule hasn't been reinstated yet, so bear raids could still go on yet the market has rallied right?

There is a bottom line to this which is important if you are looking for guidance or at least reassurance from Bob; namely, that it would appear from today's comments that he believes the bottom is in.


David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service.

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