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Topping the Bottom

Published on April 4, 2008 by in Research

I’m calling the top on the bottom. So many people have been calling the bottom. For instance, today non-farm payrolls were down 80k and unemployment jumped to 5.1% (both are clearly trending negatively) and yet the market is rallying (S&P500 up 11pts, Nasdaq up 26pts). This must mark the bottom!
Other bottom-marking rallies:

  • Bear Stearns bankruptcy rally
  • UBS $19bn writedown rally
  • Fed liquidity injection rally (several)
  • Doug Kass, Bear turning Bull rally
  • Sovereign fund injecting enough capital to achieve solvency rally (several)
  • Commodity bubble bursting rally

That’s a lot of rallies based on various factors that certainly, definitely, surely mark the bottom. Unless they don’t. Which they don’t.

Recommendation: Short the bottom. Go long the top.

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