HUSSMAN: After The Recent Market Dive, The Market Is Set Up To Tank Some More

TBI ^ | 11-11-2012 | Joe Weisenthal

[blam]

HUSSMAN: After The Recent Market Dive, The Market Is Set Up To Tank Some More

Joe Weisenthal
Nov. 12, 2012, 8:39 AM

In his latest note, fund manager John Hussman says that even after the market decline the market is primed to fall some more.

In mid-September, our estimates of prospective market return/risk dropped to the lowest figure we’ve observed in a century of market history (see Low Water Mark). That week turned out to be the high of the recent bull market, though it’s certainly too early to establish whether that was the ultimate peak. During the recent correction, I’ve noted a modest improvement in our return/risk estimates – which focus on a blended horizon looking out from 2-weeks to about 18-months. However, last week, the stock market experienced some significant damage to internals (breadth, leadership, price/volume measures, etc). As a result, our estimates of prospective return/risk have plunged lower again, to what is now the second most negative figure we’ve observed in a century of data – the September 14, 2012 weekly close of 1465.77 continues to mark the most negative estimate.

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It’s tempting to assume that last week’s market weakness was nothing more than a post-election letdown for Wall Street, or a transitory focus on the “fiscal cliff.” But that perspective would ignore the months of extreme indicator syndromes that were in place well in advance of the recent weakness. As for immediate catalysts, Germany reported a significant miss in industrial production the day after the election, and the European Union downgraded its expectations for 2013 growth. Given the clear indication of European recession, the weakness in the “backstop” country significantly complicates the prospects that Germany will continue to bail out its neighbors or embrace the monetary equivalents of those bailouts.

(snip)

[blam]

The DJIA Is Up 4.30 As I Post.

[paglia444]

I told my broker SELL! SELL! SELL!

[txrefugee]

October would have been better, but the market mavens were still hoping that Romney would win. Selling on the morning after the election was a little late.

[proxy_user]

Remember, it’s buy low and sell high. If the companies you want to own go down enough to hit your target price, now is the time to buy them. Don’t be greedy and wait for them to get even cheaper - that was my mistake in March of 2009.

At current prices, I like OXY, VOD, and INTC. But don’t listen to me, do your own research!