February 1, 2016

Contrarian view suggests market could rise

I'm not much of a technician, but the S&P 500 has now broken through the resistance level that three previous attempts failed to breach. 

We're now more than 100 handles above the S&P 500's "noon swoon" from last Wednesday, and I suspect more players will now more comfortably view that bottom as a "capitulation low."

Although nothing in the investing game is certain, breaching the $191-$191.50 resistance level on the S&P 500 ETF (SPY) could galvanize traders and investors to make the next move higher. Considering the magnitude of the decline we've seen recently in individual stocks and sectors, that could be a surprise to many.

I currently have the biggest list of individual long positions that I've had in more than a year. These include my recently added longs of the Blackstone Group, DuPont, Goldman Sachs and Procter & Gamble.

The bulls have become bears -- and the few market watchers who've been expecting a bounce haven't been particularly convinced, and many saw any rally as just a brief respite in an overall bear market.

But the contrarian view of a more-meaningful rise appears to be gaining weight in probability.

Position: Long PG, GS, DD, BX