Calling the Bottom for S&P at 800

Monday, October 27, 2008
By Faisal Laljee

The S&P 500 index fell another 8% this week and now sits near 6 year lows. But unlike the last market crash from 2000-02, this market is not expensive. The heavy selling has nothing to do with lofty valuations, instead, a weak economy, slowing growth, and fears of a recession are whats driving investor psychology.

However, I can’t emphasize enough how good of an opportunity this is to buy stocks. As Warren Buffet says, “be fearful when others are greedy and greedy when others are fearful”. The S&P 500 index has found the 825 level to be a good level of support looking back over the last 10 years.

View the full SPX chart at Wikinvest

For short-term trading, I’ve recommended trading SSO and EEV in my previous post titled Range Bound Market no longer for Stock Pickers. However, for long-term investors, the number of stocks I could spew out are endless. Google and Apple have been my obvious favorites but others including retail names Amazon (AMZN), Best Buy (BBY), Saks(SKS) along with energy names like Chesapeake Energy (CHK) and Transocean (RIG) are great bargains.

I will try to publish names of some other stocks I really like at these levels, meanwhile, I recommend building positions in some of the above names as S&P approaches 825. Why 825? Because I think that is the bottom. There, I called it. I think 800 is the absolute bottom for S&P 500.

– Faisal Laljee
Full Disclosure: I am long SSO and AAPL, but my positions can change anytime without notice.

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2 Responses to “Calling the Bottom for S&P at 800”

  1. Brendan Lee

    I am also calling for a bottom at 800 for S&P500, but based on assumption that Fed rate bottoms at 1%.

    If Fed rate goes below 1%, I will lower my target level.

    Here is my analysis:

    http://www.commoditiestradingpro.com/2008/10/where-is-s-500-index-heading-to-part-4.html

    Transocean and Apple are my favourite stocks as well.

    #609
  2. Anonymous

    What are your thoughts about the New Direxion Triple Leverage Funds

    #612

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