The harsh reality is: Goldman Ball Sachs lowered their EPS estimates for the S&P 500 to $55. That means, at current levels, we are trading 15x 2009 numbers. Going back to past recessions, the market got down as low as 8x and, usually, touched down on 10X.
If we trade down to 10x numbers, that means we’re going to 550 on the 500, which is pretty fucking hilarious, if you ask me.
But, in reality, people are just going to toss 2009 numbers to the wayside and try to crunch 2010. Sharp declines in GDP are always met with sharp increases. Therefore, taking into consideration the amount of worldwide central bank stimulus, one can make a strong argument that 2010 will represent a turning point for the economy.
Unfortunately, this little rally, that we are bathing in, will be short lived. The markets will suck goat nads for the next 6 months, until we can get some clarity on 2010.
Howsoever, bear market rallies are the best. They are sharp, insane and quite delicious. If played correctly, one could make a small fortune buying into bear market rallies.
As you know, “The Fly” intends to make large fortunes playing them. I will reserve the smaller ones for you.
So, with regards to the rally: it is not over. My guess, we run strong until Friday. It’s Thanksgiving, for Pete’s sake. People love getting long into the fucking feast. With my money, I will hold my bank longs, Citigroup Inc. [[C]] , Bank of America Corporation [[BAC]] , and play the 3x maniac etf’s, [[TNA]] and [[BGU]] , for some upside fun.
Also, at these levels, I like General Electric Company [[GE]] , [[TBT]] , NetGear, Inc. [[NTGR]] , Perini Corporation [[PCR]] and Knight Capital Group Inc. [[NITE]] .
Bottom line: I am keeping my [[FXP]] position, which is small, mainly because I am stubborn. This is NOT a market to short. You need to mud stomp the bears here, until their noses fall off.
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