Hussman comments this week

I am spending a lot of time today looking for a bottom.

My opinions is we have seen it but a drop to SPX 890 this coming week is possible.

This puts it in a better perspective.

http://hussmanfunds....c/wmc081027.htm

Though I continue to view stocks as reasonably undervalued, I'm a bit concerned that so many investors appear to be looking for a bottom. The S&P 500 currently reflects the best valuations since the 1990 bear market low. Even in the event of a continued bear market, stocks are increasingly likely to experience a powerful bear market advance, perhaps on the order of 20-25% toward the 1100 area on the S&P 500. However, we've observed little follow-through from the early price/volume improvements of a week ago, suggesting that even while traders are attempting to catch a potential rally, they are demonstrating little commitment to whatever purchases they are making in this area.

We aren't trying to catch a rally � we are gradually building an investment exposure based on valuations. Our investment response to undervaluation is straightforward: we establish investment exposure in proportion to the return/risk profile that we can expect from prevailing conditions, on average. At the 2002-2003 lows, stocks never got to the point of undervaluation, so we remained fully hedged until we observed a shift to favorable market action in the spring of 2003, at which point we quickly removed 70% of our hedges. In a market that has become undervalued, however, the strategy of waiting for a measurable improvement in market action historically has not performed nearly as well as a strategy of gradually increasing market exposure, on declines, as the market's valuation improves. Scaling in that way is certainly not comfortable, but the willingness to experience short-term discomfort is a scarce and ultimately well-compensated resource on Wall Street. The key is to scale gradually and in proportion to the expected return profile, rather than trying to �time� reversals that can't be predicted.

Lot of blah, blah, blah from Mr. Hussman. I guess he doesn't want to wait for the 200, or the 50, or even the 20 to turn up, for fear he may get in a couple of days too late.

selecto: so, in your opinion would the best and safest trade be an upcross of a rising 50 dsma of a rising 200 dsma? or if not, what WOULD be your favorite, safest, money making dsma scenario? tia ... H1

Edited by humble1, 01 November 2008 - 12:22 PM.

Lot of blah, blah, blah from Mr. Hussman. I guess he doesn't want to wait for the 200, or the 50, or even the 20 to turn up, for fear he may get in a couple of days too late.

That may be true for ST trading. As for LT commitments, one loses a huge percent gain
waiting for the 200dma to turn up.

I am loading up every time SPX drops below 900 for the LT (3 to 5 years).

selecto:

so, in your opinion would the best and safest trade be an upcross of a rising 50 dsma of a rising 200 dsma?

or if not, what WOULD be your favorite, safest, money making dsma scenario?


tia ...

H1

For passive accounts I have advised family members (who are not at all interested in the markets)
for their retirement accounts to be long a rising 200 and short a falling.
There is a tad more to it than that, but hard to get much more sublime.

Then there is everything in between until one gets to the manic part:

Trading, I occasionally book more in one 60 minute trade than the same amount
of capital would book in a year in a "safe" retirement account.



http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=10&mn=11&dy=30&i=p24528230512&r=6715.png

Edited by selecto, 01 November 2008 - 01:11 PM.

selecto:

so, in your opinion would the best and safest trade be an upcross of a rising 50 dsma of a rising 200 dsma?

or if not, what WOULD be your favorite, safest, money making dsma scenario?


tia ...

H1

For passive accounts I have advised family members (who are not at all interested in the markets)
for their retirement accounts to be long a rising 200 and short a falling.
There is a tad more to it than that, but hard to get much more sublime.

Then there is everything in between until one gets to the manic part:

Trading, I occasionally book more in one 60 minute trade than the same amount
of capital would book in a year in a "safe" retirement account.



http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=10&mn=11&dy=30&i=p24528230512&r=6715.png

man that sure puts it in perspective