Excerpt from MarketWatch
Is it 1973 all over again?Commentary: Scary scenario, but not everyone is buying
By Peter Brimelow, MarketWatch November 10, 2011
NEW YORK (MarketWatch)—Wednesday’s bad break has the bears bugalooing. But one judicious bull is standing firm … Cabot Market Letter, which has shown itself to be wedded to neither side of the market, is not yet ready to give up on its recent bullishness. (See Sept. 29 column).
It wrote last night: “We’re not downplaying today’s action, which did plenty of damage and, if nothing else, is a warning shot. But, as extreme as it was, today didn’t change the general market picture—the market is still attempting to repair the damage from the August-to-early-October crash, but remains as news-driven and volatile as we can remember. There’s been enough evidence to put a few lines in the water, but no money is being made on the long side (unless you’re a day trader), which argues for holding a good chunk of cash. We still have about 50% cash in the Model Portfolio, and today is a good reason why.”
“Overall, we still think that a 50-50 approach (about half in, half out of the market) is prudent. If today ends up being the start of a new leg down, we’ll back off and raise even more cash. But if the market and leaders hang in there and eventually get going on the upside, we’ll extend our line. For now, though, we’ll sit tight and see what comes.”