Wednesday, September 16, 2009

For GT Blog September 17, 2009

Where is BNN’s Kevin O'Leary? I need to know because he was one of the best contrarian indicators on the street. I recall a March 4, 2009 BNN Squeeze Play O’Leary rant on General Electric Company (NYSE-GE - $6.69) to be a “worthless zombie stock”.

This of course was the setup for a classic buying opportunity. To-day 26-weeks later at $17 - GE is up 154% (that is 480% annualized).

We now need to know if Kevin O'Leary thinks the big March to September advance is a bull market or just a bear market sucker rally.

This is a need-to-know because our investment returns are not governed by seeking out “value” or discovering “the overlooked” or getting “inside information” or finding “cash rich” companies. The reality is bull markets boost the prices of all stocks – the good stuff and the crap – no matter, up they go and we are all expert stock pickers.

The bear market on the other hand takes everything down the toilet. The key is to recognize the bull and get long. Bears are for traders.

I think we have a bull market because of important leadership and the failure of the bears to take the market to new lows since March. Note our chart displaying the important Financial, Technology and Industrial sectors actually posting new 10-month highs. The TSX Materials is only 5% away from a new 52-week high.

Looks like a bull to me but without the O’Leary contrarian indicator I am missing that important confirmation – so be careful out there.

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