Dow 14,000 in 2011? Battered Bulls Feel Vindicated
A jagged July ends positive, and two battered bulls feel vindicated.
First, a proprietary word: The Hulbert Stock Newsletter Sentiment Index (HSNSI) — which the reflects the average equity exposure among a subset of the short-term market timing newsletters tracked by the Hulbert Financial Digest — stood on Friday night at 35%, down from 47.5% on Thursday.
Earlier this month, Mark Hulbert argued that the HSNSI's relative slow response to the market rebound off its July 2 low was bullish from a contrary point of view.
Cabot is now 65% invested and has added two new buys: Riverbed Technology Inc. (NASDAQ: RVBD - News) and Salesforce.com Inc. (NYSE: CRM - News)
Cabot concludes with a surprisingly strong (for such a judicious service) endorsement of the venerable "Presidential Election Cycle" theory. It writes: "From the market's low point in the year of the midterm elections (like 2010), to its high the following year (2011), the major averages have averaged a gain of nearly 50%. It's true!"
Based on past performance, it projects: "With a Dow low of 9,687, a rally into 2011 could carry the index well above 13,000 and even to 14,000. It might sound crazy, but history suggests it's not just possible, but likely!
So... the Bush tax cut are set to expire and the market will rally above 14000? I doubt it. But what do I know. At least they didn't say the Volt is going to be a hit - and totally not a waste of tax payer funds...