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August 5th Close to Mark Short Term Bottom

August 5th Close to Mark Short Term Bottom

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Published by Arthur O'Keefe
SPY and XLV could form a short-term bottom at the close of August 5, 2011
SPY and XLV could form a short-term bottom at the close of August 5, 2011

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Published by: Arthur O'Keefe on Aug 05, 2011
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08/05/2011

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 August
 
5th
 
close
 
to
 
mark
 
short
 
termbottom?
 
SPY,
 
 XLV 
 
look
 
intersting
Posted on
5
 
 August
 
2011
Quick post: Technicals of theS&Plook very oversold. Fair value still looks to be around the 1250-1275levels. Given the Fed meeting next week, there could be a short bounce to play of buyingtoday at the close. The model is recommending to long at the close today.We are in the midst of a liquidity crisis, but it is a different flavor from 2008 which was drivenby corporate (bank) failures. Today we are looking at government failures. Corporations arerelatively resilient still.S&P 500 sales are rock solid:
S&P 500 Model at 2011-0805
São
 
Paulo
 
 Value
Latam Credit Investing from São Paulohttp://www.spvalue.com
 
 Back in 2008, sales margin (earnings to sales) had already turned for a while. Today they arestill at the peak:
S&P 500 Sales at 2011-08-05
 
Neither sales or sales margin are predicted to soften in the next 3 months.Which means the big question is what’s going to happen to earnings multiple. Finally weare approaching a short term reasonable multiple which points to a tactical (short term call)bottom:
S&P 500 Margins at 2011-08-05

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