Back on October 5th, following a 520 point (9898 to 9378 intraday) decline in the DJIA, we posted "Do not sell equities, Credit Suisse says" with the comment:
I am always skeptical of blanket statements from investment banks. We link to this one because we happen to agree (in the immediate term. Long term, who knows?)....The Dow closed at 9599.75 on 10/5 and at 10,185.53 yesterday. Here's the chart of the Dow Jones Industrial Average, one month prior to and four months after that call (from BigCharts):
Strategists at Credit Suisse entered 2010 with a very cautious tone and an outlook similar to our own – 2010 would be a year of halves. The first half would be a continuation of the trends that helped the
marketsurge in 2009 while headwinds would build near H2 2010 and result in market declines. The recent downturn in stocks hasn’t changed their outlook and they view the sell-off as a buying opportunity (see JP Morgan’s similar outlook here as well as Raymond James’ outlook here).
The team’s tactical indicators are mildly bullish at current levels and quickly approaching levels that were buys in 2009:
Our tacticals are mildly supportive of equities:
Interestingly, the % of nyse stocks trading above their 10-week MA (currently at 32%) is around similar levels where market bottomed during recent corrections (end of Oct it troughed at 30%, in early July 09 at 37%). Normally a buy signal is when this indicator falls below 20% but perhaps most of the correction has already occurred??
Sentiment data also supports their bullish thesis as the majority of investors remain net bearish...MORE
While sentiment readings don't underpin our thinking, we happen to agree with the rest of their analysis.
[happen? go ahead, play the song -ed]