MarketWatch columnist Peter Brimelow follows up his earlier column on Cabot Market Letter, which had quickly turned bearish when its intermediate market timing indicator, Cabot Tides, turned negative. With 67% cash, the Letter is bearish but wistful, according to Brimelow.
Excerpt from MarketWatch
Two bulls stay stoical in market madness
Commentary: Cabot Market Letter and Sound Advice unpanicked
By Peter Brimelow, MarketWatch September 29, 2011
NEW YORK (MarketWatch)—Two successful bulls stay stoical amid market madness.
On Monday, I told the tale of Cabot Market Letter, which has been successfully bullish most of the time since the 2008 crash and which attempted to resume its bullish late last week.
The bear market promptly bit off its hoof. (See Sept. 26 column.) Cabot reversed itself with impressive alacrity. But what does Cabot say after the market rebound?
As of last night, Cabot remained bearish but wistful. It wrote: “Remain defensive. While the market has held up after last week’s punishment, we’ve yet to see any meaningful buying pressures, or more than a few stocks setting up…. There are no changes in the Model Portfolio tonight, which has a hefty 67% cash position.”
But Cabot’s wistfulness shows through in its attitude to one of its holdings, an exchange traded fund designed to double the market’s performance.
It writes: “ProShares Ultra S&P500 (SSO) has been violently flopping around just like the overall market. If you’re craving cash, there’s nothing wrong with taking the small loss here, but since we’re already highly defensive (67%) cash, we’d rather give the fund a chance to get going here ... with the 37 to 38 area as a logical stop. Hold.”
Over the past 10 years through August, Cabot Market Letter is up 7.56% annualized by Hulbert Financial Digest count versus 3.68% annualized for the dividend-reinvested Wilshire 5000 Total Stock Market Index.
Link to full story on MarketWatch: http://www.marketwatch.com/story/two-bulls-stay-stoical-in-market-madness-2011-09-29?siteid=nbkh