Summer (3rd bottom) Target levels

As mentioned in the last post, I expect a 3rd leg down on the markets this summer. If recovery (or stabilization) is in the wake for last this year, US Stock Markets would provide the next large leg down to be the 3rd bottom and a decent entry points for selective buying of high quality, low-debt, strong business Cos.

Roughtly, I am targetting to wait for these levels:

S&P: ~ 600, NASDAQ : ~1200, Dow: 6300~6400 (Exact target nos. to come out when/if this down leg eventually starts later :- this-spring/early-summer)

Basically another round of cleansing to ~10% from March-6th lows before initiating another round of selective buying. This buying will be provided we see enough divergence on charts to conclude that it’s a safe buying opportunity. Till then cash, hedged and some safe bets (INTC, GE, GLW, LLY,) are only holdings.

Also, do take at this nice video clip.
http://www.forbes.com/2009/01/23/intelligentinvestinggrantham.html

Covers a broad range of investment topics and sets the long term perspective right from here on, in a simple 25 min Video interview.

Enjoy the Game.

Perfect day to go 30~40% cash

Stock Markets:

I think short term top is close/here/today.

Or may be another day when Dow hits 7800, S&P 820 and NASDAQ 1540, and it’s going to be over. These are short term resistance levels. This euphoric cycle may go on this week or some more.. but decent exit levels on stocks hitting 20~30+% runs per day, may just vanish as we reach close to the chart tops.

CSCO:

Also, a great day to sell CSCO ESPP, esp. for those you want to sell some ESPP (only if urgently they need some cash), then today is the day. Else within 1~2 years better prices shall be seen. CSCO has shown decent strength recently so another capitulation under 14 isn’t expectedly shortly.

Accumulate and enjoy the cash for better opportunities, later after this summer.

Opportunity for Selective Buying in Around HERE.

I think, the time to use the selective buying window is now/around here. Of course I expect the 3rd bottom leg sometime this summer, some of the LongTerm Buying opportunities can be started for gradual accumulation in time-windows like this week offered.

I don’t expect major uptick or bull cycle anytime soon. But a decent reversal from depressed levels. Since this is a deep recession, I think this time it’s not going to be an easy or painless recovery. It’s going to take it own time. Also, I think before any up-cycle begins, real big-money will wait till valuations stabilize and become attractive again. It’s different from 80s and 90s and 2000s market. No wonder, Warren Buffett is also committing mistakes, . For he also has not seen business/deleveraging cycles like these.

However, various selective stocks which would be ‘on sale’ now and further again later this summer, they may not be available for same valuations next year, after the dust of fear/uncertainity storm settles. But time to consider and start selectively and gradually accumulating is here.

Also, for picking I’d go by valuations of Cos. (INTC, GLW, LLY, TOL, MDC) and not by name of Cos. (GE, etc.). Some credence can be given to the sector, as new growth sectors are expected to emerge in coming times.

Enjoy the Investing Game.