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"Big Bear Market Rally Coming," Says Noted Bear Barry Ritholtz

Posted Mar 10, 2009 08:35am EDT by Aaron Task in Investing, Newsmakers

Updated from 8:35 a.m. ET

Stocks jumped early Tuesday with the Dow recently up about 3.5% while the S&P and Nasdaq were each up more than 3.8%. The gains are being widely attributed to a leaked memo revealing Citigroup had operated at a profit during the first two months of the year. But the reality is the market was due for at least a short-term technical bounce after its recent rout, as discussed in the accompanying video, taped Monday afternoon.

Earlier: Despite a confirmed deal in pharma and rumors of a second, the stock market slumped to yet another round of multi-year lows Monday.

Still, the cadre of formerly steadfast bears who are turning bullish, like Doug Kass and Steve Leuthold, continues to add members. On Monday, newsletter writer Mark Faber, of the Gloom, Boom & Doom Report, made a bull call on Bloomberg TV, while veteran technician Richard Suttmeier of ValueEngine.com declared "the next 50% for [the S&P 500] is up, not down."

"There's a big bear market rally coming," agrees Barry Ritholtz, CEO of Fusion IQ, who's certainly earned his place in the pantheon of bears during this recent cycle. Ritholtz sees "more upside vs. downside" potential for major averages from current levels, and definitely believes it's "too late to sell."

Fusion IQ has covered its shorts but Ritholtz, author of The Big Picture blog and the forthcoming "Bailout Nation", isn't a rip-roaring bull. He's advising investors to "prepare a wish list" of stocks they'd like to own for long-term investments, but stresses the importance of scaling into positions vs. making a big one-time bet that a major "bottom" has indeed occurred.

Full disclosure: I am collaborating on Ritholtz's book and being paid for my efforts.

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324 Comments

Yahoo! Finance User
Yahoo! Finance User - Tuesday March 10, 2009 08:44AM EDT

I just wish I had more money that I could put into the market...don't know when an opportunity like this is going to come again?

- Tuesday March 10, 2009 08:54AM EDT

I guess there has to be an interlude with a little less of bad economic and financial news - enough for a short term bull rally. I'm sure this will be a good opportunity to all those still long on stocks. I'll just say to all of you who are still stuck in the market - All the best.

Yahoo! Finance User
Yahoo! Finance User - Tuesday March 10, 2009 09:01AM EDT

SHUT.......UP !

- Tuesday March 10, 2009 09:01AM EDT

I agree.

Yahoo! Finance User
Yahoo! Finance User - Tuesday March 10, 2009 09:02AM EDT

Funny taxpayers were dumping billions into CITI now they show a profit during that time. Is Obama lying to us again.

Yahoo! Finance User
Yahoo! Finance User - Tuesday March 10, 2009 09:02AM EDT

Funny taxpayers were dumping billions into CITI now they show a profit during that time. Is Obama lying to us again.

Yahoo! Finance User
Yahoo! Finance User - Tuesday March 10, 2009 09:04AM EDT

Same bullshit, different day. At least put a smoking hot chick out there. This guy looks like Lumpy from Leave it to Beaver

- Tuesday March 10, 2009 09:04AM EDT

Be careful jumping in with the trillions going out from our government.

- Tuesday March 10, 2009 09:09AM EDT

If one looks only at the markets I'm sure it all looks great. But reality dictates that the real pathologies that caused the meltdown have not come close to being resolved. Housing values are still dropping, foreclosures are on the rise, people are in debt to their eyeballs and they are not willing to take on more debt. America has not made the requisite changes to capitalize off the present chaos. Nobody has been prosecuted for the fraud and graft that still lives in corporate America. Why invest in a severely sick system. Deal with the real issues before you try to suck people into another fake economy. The markets are not the real litmus test for American society. American people are. Are you hearing their message?

- Tuesday March 10, 2009 09:10AM EDT

If the government dumped billions into me, I would show a profit too. Oh crap, it is my money we are dumping into Citi.. no wonder I have less profit.

- Tuesday March 10, 2009 09:12AM EDT

No sniping allowed. If you don't have any positive suggestions, don't bash the President is taking action to reverse this mess he didn't create.

Yahoo! Finance User
Yahoo! Finance User - Tuesday March 10, 2009 09:27AM EDT

Obama and the media like CNBC are trying to build a "flase bottom" in the market. If you fall for it you really will be a SUCKER! When you see all of the buy-outs and mergers, it's all short stuff as they want to fire half their employees. More unemployment=Depression. Citi? Profit? Best quarter? Do they mean that they lost 100 billion so far? I guess it's better than a loss of 150 billion? Fools. It not all psychology this time; it's all about the STRUCTURE of an economy minus abused credit and you can't put lipstick on this pig.

Yahoo! Finance User
Yahoo! Finance User - Tuesday March 10, 2009 09:29AM EDT

Dear Fancy That. Equties have tanked over two trillion dollars since Obama's been in office and more than that since he got elected. Fancy that!

Yahoo! Finance User
Yahoo! Finance User - Tuesday March 10, 2009 09:29AM EDT

Obama is part responsible for this mess. From his days as a community organizer, suing banks who wouldn't give risky loans, to his years in Congress voting against those who tried to clean up the system, to his recent on-the-job-training which has tanked the market another 30%. Are you better off now than you were four months ago?

- Tuesday March 10, 2009 09:29AM EDT

This was recorded Monday, March 9th around 3pm

- Tuesday March 10, 2009 09:31AM EDT

Fool's bait! Option ARM and ALT-A resets are about ready to go full swing and take out another 27% out of house prices. Equivalent to the subprime effects. Dow 3,000 and S&P 300 by 2012.

- Tuesday March 10, 2009 09:32AM EDT

Fancy get real. Your boy Obama is now a part of the problem now that all of his pork belly spending has past through congress. And if you think he is going to reverse the problems he didn't create...you also have another thing coming...he's only creating more problems for the future.

- Tuesday March 10, 2009 09:33AM EDT

Fancy That, Another KoolAid drinker! The President is not taking action to reverse this mess Pelosi and Reid exacurbated in the past 2 years. He is allowing the two aforementioned to destroy our economy the way Carter did. Stagflation is next. After we tax business owners, prices will rise and so will unemployment, so we will print more money and create an inflation.What Does Stagflation Mean? A condition of slow economic growth and relatively high unemployment - a time of stagnation - accompanied by a rise in prices, or inflation. So that all said... your President is sending us down the drain so he can restructure us into a Socialist society. Welcome to Europe II. Please, in the future, understand what you are talking about and stop drinking the Kool Aid.

Yahoo! Finance User
Yahoo! Finance User - Tuesday March 10, 2009 09:33AM EDT

Fancy That, Obama did help create this situation. He was the junior Senator from IL for 4 years. When did the meltdown begin? During the campaign, he ran back to Washington to play what was touted at the time as a major role in crafting what would become the TARP bill. It's interesting that he doesn't claim ownership of that anymore. What would we be hearing if it had worked? Finally he volunteered to run for president; they all do, so he cannot say truthfully that he "inherited" this. Instead, he asked for this opportunity and a small majority of American's gave him that chance.

- Tuesday March 10, 2009 09:33AM EDT

I have a small position to be sold into any rally. I agree with the poster who said our system is broken. While some traders will make money as the market gyrates, I'm going to wait until I hear sense coming from Washington. What I hear now makes me cringe. Until then, I'm on the sidelines.

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