They just can’t help themselves – which I suppose isn’t surprising, since they don’t really have much to lose by doing so.

The way they see it is: If they’re wrong, chances are we won’t remember anyway. And if they’re right, they can crow about it for years.

They are in fact wrong. But they’ll probably claim victory in the next few weeks or months. Sentiment is so bad that many are claiming this contrary indicator signals the bottom is in.

Current Investor Confidence- All Hail The Doom

In recent weeks, we’ve seen two confidence surveys that paint a pretty grim picture…

• Last month, the Consumer Confidence Index reached the lowest point in its 42-year history.
• The American Association of Individual Investors (AAII) Bull/Bear survey showed over 55% of respondents are bearish, while only 30% make bullish claims.

And countless financial articles have proclaimed the death of buy-and-hold investing.

Typically when sentiment is at extremes, markets move in the opposite direction, catching most investors unprepared.

If you were getting jittery and ready to sell some of your stocks, you may want to think about hanging on a bit longer and sell into a rally rather than dumping them in a panic.

Okay, Mr. President… What Now?

Despite its bold rescue and recovery proposals, the Obama administration’s rhetoric hasn’t impressed the market one bit. The White House knows it. And while it won’t necessarily be pandering to investors, Obama’s team must know that with every brutal selloff that makes headline evening news, the very hope and confidence that it’s trying to inspire in Americans is eroded a little further.

Because of that, I wouldn’t be surprised to see some steps taken to lift the spirits of market participants. Something much more substantive than Obama telling American investors that it was a good time to buy, that is. Here are two things that could happen…

1. A reinstatement of the uptick rule, which requires short sellers to wait for an uptick in price before they can sell short.
2. The suspension of mark-to-market accounting, which would free up the balance sheets of financial institutions. Or it could possibly be something else completely unexpected.

But mark my words: Whether it’s a government-sponsored rally, or just a natural part of the cycle, be prepared to see a strong surge upward. Bear market rallies are notorious for featuring fast and sharp moves higher.

However, should such a rally occur, be sure to keep the bigger picture in mind. Don’t get swept away by the positive emotions… only to lose out as the market recedes again.

We may see a rally, but they’re not called “bear market rallies” for nothing. Bear markets don’t generally end, and bull markets don’t generally start, with big moves higher in the market. It’s almost always a much more gradual process.

So Where Is The Bottom, Marc?

Talk about the $64,000 question…

I’m not going to be one of those guys that attempt to call the stock market’s bottom. At least not yet. Why?

Because it’s a mug’s game, and I believe this drastic selling won’t end until the S&P 500 is trading at a single-digit P/E multiple. Here’s why…

My friend John Roque, who works for Natixis Bleichroeder, discovered a scary fact…

Going back to 1881, the four times that the P/E ratio of the S&P 500 rose above 20, it eventually turned around and didn’t stop falling until it hit single digits. The average of those four trough valuations was 6.4.

The P/E ratio of the S&P 500 peaked at 44 in 1999 and has been falling since then.

Earnings for the S&P 500 this year are expected to be $48. But it’s quite possible that this figure will dip even lower if the economy continues to slide. For example, Goldman Sachs’ (NYSE: GS) estimate is $40. But for the sake of our argument, let’s use the much more optimistic $48 target.

If we assume that the P/E ratio will drop to 9 – a number higher than any of the previous trough levels – that would suggest an S&P 500 of 432. Unfortunately, that’s another 37% drop from current levels.

So What Can We Do?

Simply put, if we see a strong bear market rally between 10% to 20%, I’d sell some of the more expensive names and get some capital ready for what I believe will be one of the biggest buying opportunities in at least a generation.

Next, make a stock watchlist of companies you want to own. Which ones? Start by looking at cheap stocks with stable dividends. Firms that fit the bill here are Bristol-Myers Squibb (NYSE: BMY), a member of our Xcelerated Profits Report portfolio and Boeing (NYSE: BA), which already sports a P/E of 8 and is suffering through extremely negative sentiment.

Here’s another sector that could benefit, even if the market continues to slide…

Biotechnology.

I think the biotech acquisition boom will finally occur. That’s because small-cap biotech names will be so cheap that it will be tough for Big Pharma companies to resist those low valuations.

In summary, the next 6-9 months will not be for the faint-hearted. I think a 450-point reading on the S&P 500 is a very real possibility. And when that occurs, I’ll be backing up the truck to load up on all of my favorite names.

I’ve given you a couple of names and a sector to watch for here, but I’ll be sharing many more with you in the pages of the Xcelerated Profits Report. And if you want a piece of that action, now’s is the best time as any to get in. What are you waiting for?

Hoping your longs go up and your shorts go down.

Source: Watch This Sector During The Upcoming Bear Market Rally

Here she recommends to buy gold, invest in stocks with discrimination and keep your money liquid in treasuries.

This from Sandy:

The stock market did not react well to the government’s $787 billion economic stimulus plan.

On Feb. 23, 2009, the Dow tumbled to 7,114 – hitting an eleven-year low. The other major indices, including the S&P 500 and the Nasdaq, fell as well.

The latest economic numbers aren’t any better. The price of single-family homes plunged 18% and the Consumer Confidence Index, which was down slightly in January, plummeted more than 12 points in February to 25.

The combination of bad economic news and a tanking market means this recession will take longer to recover than most analysts expect.

Bombarded by bad news, average investors are on the verge of dumping all their shares entirely. But is that best thing to do with your money now?

The answer is no. Here are a few investing strategies that make sense given the current market conditions…

(1) Buy gold. The surge in gold prices means investors are anxious to protect their capital against inflation, currency depreciation and bank failures. The rise in gold (which is sitting near $1,000 an ounce) is consistent with other indications that the market is bracing for a delayed upturn in inflation between 2010 and 2012.

There would have to be “growing positive sentiment” towards the banking sector before gold prices fell. But that isn’t likely to happen anytime soon. Morgan Stanley came out with a report saying that gold would go up over the next three years. The reasons: a falling dollar, higher inflation and a flight to safety.

Morgan Stanley predicts gold will average $1,000 in 2010 … $1,050 in 2011 … and $1,075 in 2012, up as much as 34% from previous estimates.

Adam Lass, senior editor of WaveStrength Options Weekly, suggests buying shares of the SPDR Gold Trust. Adam writes, “I expect the dollar to resume its habitual relationship to the euro, yen and gold shortly, and recommend that investors continue to buy shares of the SPDR Gold Shares Trust (GLD:NYSE), which has gained some 25% over the past four months.”

(2) Buy stocks, but do so discriminately. This week the Dow fell to levels not seen since 1998. One year ago, the Dow was sitting at 12,694. As I write, it’s at 7,365. But you don’t need me to tell you this. You see the damage to your portfolio every time you look at your 401(k) statements.

As prices decline, this also means there are companies you can buy for less than the cash they have on hand. In fact, in an academic study done by Berardino Palazzo of New York University’s economic department, he found that companies with highcash-to-assets carry a positive premium for investors. Palazzo explains, “Firms that are sensitive to economic shocks tend to use cash holdings as a hedge against future cash flow shortfall, and this conservative management approach pays off.”

There are certainly plenty of companies with cash on hand to choose from. In a study done by Jason DeSena Trennert, managing partner and chief investment strategist at Strategas Research Partners in New York, he found corporate balance sheets showed that cash as a percentage of total assets is as high as it’s been since the 1960s.

Chris DeHaemer of BreakAway Investor offers these companies for consideration:

**AuthenTech (AUTH:NASDAQ) is a technology company that provides fingerprint authentication sensors. Its fingerprint sensors allow users to access and control multiple functions on an electronic device by touching or sliding their finger across the sensor. The sensors are used in various applications related to security, password replacement, financial transaction authentication and personalization applications.

Its sensor-related products are used in GPS navigation systems, cell phones, memory keys, laptops… even desktops.

The company has zero debt and roughly a cash equivalent of $2.21 per share. It currently trades around $1.37 per share.

**Exxon Mobil (XOM:NYSE). If you prefer a non-technology-related company, there’s always Exxon Mobil with $39 billion in cash, which is equal to $7.72 total cash per share. Exxon reported a profit of $45.2 billion for 2008. This amount breaks the record for an American company.

Zachary Scheidt of Taipan’s New Growth Investor suggest buying companies in sectors that will continue to thrive during this economic crisis.

One such sector is healthcare. There are basically four individual factors that combine to make this quite an exciting opportunity:

• Stability and growth: Healthcare stocks offer plenty of stability, but the growth is potentially astronomical;
• Demand has little do with economics: A person’s health sits right at the top of just about everyone’s priority list;
• Demographic trends point to more demand: The current population (domestically and internationally) is aging and in need of more care than ever seen in the past;
• Political agenda favors healthcare: One of Obama’s campaign promises was to re-work the healthcare system and to make sure affordable care was available to all.

(3) Another way to protect your money is to keep it liquid in treasuries or certificates of deposit.

Because of the scandal that broke loose with the SEC charging Allen Stanford in an $8 billion fraud case (using certificates of deposit), you’d think that all CDs are time bombs.

But that’s not the case. The dead give-away in the Stanford case is that his “certificate of deposit” promised double-digit returns. Stop right there. Certificates of deposit don’t yield high returns. They’re low risk, which means low yield.

A CD has a specific, fixed term – often three months, six months, or one to five years – and carries a fixed interest rate. They are also insured by the FDIC (up to $250,000). The longer you are willing to have your CD investment locked up, the higher the CD interest rate your bank will offer you.

CDs are best used for cash that you want to stay liquid. As the market continues to implode, you might want to consider putting a portion of your money into a CD. As the market begins to bottom out, you’ll have access to that cash to buy stocks at reduced prices.

While most major banks offer CDs, we recommend the Ultra Resource Index CD offered through EverBank. EverBank asked our group’s opinion on creating a CD that would allow investors to take advantage of global markets.

We suggested a CD made up of six countries with strong resources and strong cash reserves, including Australia, New Zealand, Singapore, Hong Kong, Canada and Norway. You can lock in terms for three to six months with no account fees.

EverBank is a healthy and stable company. It enjoyed strong growth during the first three quarters of 2008, posting a 129% increase in earnings compared to the first three quarters of 2007, or $50.1 million. The company also has assets worth $6.5 billion and serves 440,000 customers worldwide.

I do have to tell you that we have a business relationship with EverBank, and we receive a financial benefit from the sales of this product. But we firmly stand behind EverBank and their products and think they are a solid way to grow your wealth.

If you’d like to learn more about the Ultra Resource Index CD – to get in on an once-in-a-lifetime opportunity to profit from today’s currency boom before the masses – you should check out this Special Report we’ve put together for you. Download this FREE Report now.
Source: What to Do With Your Money Now

• The Conference Board said yesterday (Tuesday) that its Consumer Confidence Index now stands at 44.9, up from a revised 38.8 in October. Last month’s reading was the lowest since the research group started tracking the index in 1967.

• Home prices plunged in the third quarter, according to the S&P Case-Shiller Home Price index, which posted a 16.6% drop for the three-month period. That outpaces the second quarter’s record 15.1% decline.

• The number of problem U.S. banks and thrifts soared to 171 in the third quarter, up from 117 at the end of the June, according to the Federal Deposit Insurance Corp. (FDIC).  The industry-funded reserve to back deposits was $34.6 billion as of September 30, 23.5% smaller than in the previous quarter. Bank industry income fell 94% from the previous year to $1.7 billion in the third quarter.

• Oil prices again fell yesterday (Tuesday), sliding almost 7% to settle at $50.77 a barrel. “The focus in the oil markets is again on softening demand in the wake of a weak GDP,” Phil Flynn, an analyst at Alaron Trading, told Reuters.

• Grupo Financiero Inbursa SA, a bank controlled by Mexican billionaire Carlos Slim, scooped 26 million Mexico-traded shares of Citigroup Inc. (C) for about $134 million, Bloomberg reported. The buy amounts to less than 1% of Citigroup’s stock.

• Shares of homebuilder D.R. Horton Inc. (DHI) rocketed 38% yesterday (Tuesday) despite posting a fourth-quarter loss of $799.9 million, or $2.53 per share. Analysts cheered the company’s existing cash flow, “likely indicating aggressive pricing strategy for” 2009, a Credit Suisse Group AG (CS) report said.

Source: Global Investing Roundups Wednesday, November 26th, 2008

* The Conference Board said yesterday (Tuesday) that its consumer confidence index fell to 38 – the lowest level since the Conference Board began tracking consumer sentiment in 1967. The index registered a revised 61.4 in September, which makes this month’s drop the third-steepest drop on record. A year ago, the index stood at 95.2.

* The Standard & Poor’s/Case-Shiller 20-city housing index dropped a record 16.6% from August last year – the largest drop since its inception in 2000, The Associated Press reported. Prices in the 20-city index have plummeted more than 20% since peaking in July 2006, the group reported. The 10-city index tumbled 17.7% — the biggest decline in its 21-year history.

* The Organization of Petroleum Exporting Countries (OPEC) said yesterday (Tuesday) that it would continue to prop up the oil market and may call another meeting before the group’s next scheduled conference in December. “If circumstances dictate we have to have another meeting, we will have a meeting before the Algerian meeting,” OPEC Secretary General Abdullah al-Badri told Reuters.

* Whirlpool Corp. (WHR) said yesterday (Tuesday) it will eliminate about 5,000 jobs this year and next, as the U.S. economy continues down its path to recession. The nation’s largest home appliance maker said its earnings fell 7% in the third quarter.

* Despite a market deep in bear territory, Wall Street professionals still expect year-end bonuses. According to a survey by eFinancialCareers, a unit of specialty jobs site operator Dice Holdings Inc. (DHX), 67% of workers expect a bonus for 2008. But some companies, such as Deutsche Bank AG (DB) have already announced top executives would not receive bonuses for the year, Reuters reported.

* Credit Suisse Group AG (ADR: CS) and Deutsche Bank AG (DB) yesterday (Tuesday) both refused to provide financing for the $6.5 billion buyout of Huntsman Corp. (HUN) by a unit of Apollo Global Management LLC. The banks refused to fund the purchase of the chemical company because the combined company could prove insolvent, Bloomberg News reported.

* The 100-year-old Christian Science Monitor said yesterday (Tuesday) that it would stop printing a daily edition next year in order to focus on the Internet – becoming the first nationally distributed newspaper to do so, Bloomberg News reported. And in a related story, national newspaper publisher Gannett Co. Inc. (GCI) said it would cut 10% of the workers at its community newspapers – a move that follows a cut of 3%, or 1,000 jobs, back in August. The cuts should be completed by early December and don’t apply to USA Today, Gannett said. Gannett, which publishes 85 daily newspapers, recently reported that third-quarter revenue declined 9%, and said it would re-evaluate its dividend policy.

Source: Global Investing Roundups Wednesday, October 29, 2008

More from Bloomberg:

The dimming outlook signals consumer spending, which accounts for more than two-thirds of the economy, will deteriorate further, deepening the U.S. slump.

“The economy feels like it is contracting at a rapid pace,” Lewis Alexander, chief economist at Citigroup Global Markets Inc. in New York, said in a Bloomberg Television interview. “It’s clear that consumers have really been affected by the volatility we’ve seen in the last six weeks.”

The report underscores voter discontent with the country’s direction heading into the Nov. 4 presidential election. A majority of voters think Illinois Senator Barack Obama, the Democrat, will be better able to handle the economic turmoil than Republican rival John McCain, according to polls.

The Daily Reckoning’s Bill Bonner warned yesterday how the crisis that started on Wall Street was rapidly spreading to businesses and consumers all across America.

The next stage will come when consumers go on a rampage of thrift. Credit cards will go in the trash. Malls will be silent. Sales clerks will fall asleep on the job – and then be fired. Higher unemployment. More foreclosures. More bankruptcies.

And when Americans don’t shop, it will be products Made in China that they aren’t shopping for. That’s why the depression will be worldwide – the first ever.

“China, India, Brazil and Russia (the BRICs), the biggest emerging economies, export most of their products either to each other… or to the developed economies [mainly, the USA],” continues La Prensa.

Yes, Dear Reader… our “Crash Alert” flag is still up – even though the stock market, the housing market, the financial market, and the commodities market have already crashed. But now, there’s another flag up on our mast, a black flag. On it is a white duck laying on its back with its feet up in the air.

It is our way of warning you: “Global Depression Alert” it says at the bottom.

.

The day’s economic numbers were pretty grim.

The Conference Board reported that its May consumer confidence index fell to 57.2 from a reading in April that had been revised up to 62.8 from a prior estimate of 62.3. That represents a 16-year low, and was far below economists’ expectations for a reading of 59.5. Confidence is off by nearly 50% since last July.

“With home price deflation deepening, the unemployment rate rising, and food & energy costs climbing, there’s little to buoy consumers’ outlook,” wrote Benjamin Reitzes, an economist at BMO Capital Markets. Yet the stock market rose and gold fell. Go figure.

The deflation was confirmed by Standard & Poor’s 20-city Case-Shiller home price index, which fell 2.2% from February to March, for a 16th consecutive decline in prices. Home prices in the 20 major U.S. metropolitan areas have now plunged by a record 14.1% in the past quarter.

Meanwhile, the euro got no lift from comments by European Central Bank Governing Council member Axel Weber. Weber said in an interview that rate cut speculation this year is “wishful thinking,” given high inflationary pressures and robust economic growth.

Source: Dollar Gains Against Euro

The trade gap jumped 5.7% to $62.3 billion in February, up from a revised $59 billion the month prior, as cars, industrial machinery, and pharmaceuticals carried imports to a record high $213.7 billion.

Exports climbed 2.0% to $151.36 billion from $148.38 billion, but the increase still wasn’t enough to outpace imports, leaving analysts to wonder whether or not exports would be the saving grace of a U.S. economy that seems to have run head first into a recession.

Many economists, including those at the U.S. Federal Reserve, have said that foreign demand for U.S. goods would continue to prop up the ailing economy.  The theory was supported by a weak dollar, and a drop-off in consumer spending that was expected to have suppressed demand for foreign goods.

“Net exports should continue to provide considerable support to U.S. economic activity in coming quarters,” Federal Reserve Chairman Ben S. Bernanke said last week.

The Consumer Confidence Index declined 12 points in February, and retail sales dropped 0.6% for the month. The greenback was down 10% against a trade-weighted basket of currencies in the 12 months ended February, according to Bloomberg data.

The odds seemed so heavily stacked against a rise in imports that some analysts had trouble believing the Commerce Department’s report.

“I guess all the reports of consumers turning conservative were wrong,” said Joel Naroff, president and chief economist at Naroff Economic Advisors.  “It was also reported that businesses went out and bought lots of capital goods. Given the state of the economy, that doesn’t make much sense either.  Maybe the importers got it wrong.  Or maybe the data are a little suspect.”

“It’s hard to believe that the jump in imports of consumer goods and motor vehicles, which led to the widening of the trade deficit, was anything more than a mistake in judgment,” he added.

Whatever the case, analysts anticipate a significant drop in imports for the month of March as inventories rose and the price of oil hit a record high.

“Importers may have over-estimated consumer demand,” David Resler, chief economist at Nomura Securities International Inc., told Bloomberg. “Inventories, some imported, are rising rapidly.  That will signal domestic producers and importers will cut back.”

Regardless of whether or not the trade deficit narrows in the months ahead,the problem remains that the economy may not get as much of a positive addition to first quarter growth from trade as hoped for. The advance estimate for first quarter gross domestic product (GDP) will be released April 30.