BEHIND THE MONEY: On the Sidelines? Merrill's Top People Say Not Time to Say 'Put Me in Coach'
All this week on Fast Money we will discuss how many investors are waiting "on the sidelines". There is a record amount of cash out there. Each day, a FM trader will profile an area of the market that they feel should be your first place to go, when you are finally ready to say, "Put me in coach."
As for when that magical moment will come, Merrill Lynch's top people say you should still wait. In a new group report by their top analysts, Merrill's chief investment strategist, North American economist, technical research analyst and quantitative strategist said that their work collectively points to some more downside for equities.
"Currently, only 2 of 16 component indicators highlighted by our economists and strategists are signaling that the equity bear market is over," wrote the group in a report this morning. Share repurchases, housing inventory, valuation and new highs vs. lows are among the market indicators used across the various disciplines by the Merrill people.
"History shows quite clearly that being early can carry substantial performance penalties," Merrill writes. "We believe it has historically been better to actually be somewhat late." They recommend staying in Treasuries, defensive sectors and high-quality dividend stocks.
So as you're watching our "On the Sidelines" series, should you listen to Merrill and just jot down the ideas and keep your hand on the trigger? Generally the feeling on the Fast Money desk agrees with the Merrill thesis. Not time yet to dive in.
Also, Merrill's strategist (Richard Bernstein), economist (David Rosenberg) and technical analyst (Mary Ann Bartels), are all ranked among the top four analysts in their respective area by the 2008 Institutional Investor Magazine poll of money managers. I also personally find their analysis to be among the best on The Street.
But if you're too antsy to wait on the sidelines and jumping in already with some active trading strategies, it looks like you're not alone. Bloomberg news reported Friday (in a story written by the astute Edgar Ortega) that Charles Schwab , TD Ameritrade and E*Trade "are benefiting from investors' increased interest in options and more savvy trading strategies after the Standard & Poor's 500 Index fell to a five-year low." Ortega cites Schwab's daily trading, which surged 56% from a year earlier in October.
So tonight we'll try to have a little for everybody: those of you still looking for good ideas, but still waiting on the sidelines and those of you who are in there actively trying to fight the good fight during these wild swings in the market.