Well, we've seen this movie before.
I'd say “I told you so” but that's getting boring and, after all, the headline for yesterday's post was “China's 20.4% Import Collapse Has Us Testing S&P 2,000 Again” so it's not like it was a subtle prediction. Last Friday, despite the rally it was “Earnings Iceberg Dead Ahead” and, like the guy who said the same thing on the Titanic – nobody likes to listen to the guy with bad news, do you?
Ever Cramer has finally come out of his buying stupor and is telling his sheeple to cash out and get to the sidelines. Of course, if Cramer is on my side of the table, I have to question my premise as I called this top 2 months and 5% ago while he was still foaming at the mouth and telling people to BUYBUYBUY at 2,100+. I'm the guy that Cramer warned you was “spooking people out of stocks too soon” but it's a Hell of a lot easier get to cash while the market is going up than after it's already pulled back and your portfolio has taken damage.
It's also a lot easier to hedge when the market is high – as the hedges are a lot cheaper then. Cramer's newfound selling premise is based on the McClellan Oscillator, which I had pointed out last week was way overbought and remains so BUT it's significantly improved from last week on a fairly minor overall pullback and that's actually a bullish signal – if the indexes confirm by holding our bounce lines.
Back on 8/26, we predicted the indexes would bounce from their 2015 lows (8/24 was the big crash) to the following levels, based on our fabulous 5% Rule™:
