A Bottom Or Not? Pick Your Analyst

A somewhat quiet, low volatility day, with strength in financials, industrials and materials.

GM's plan they will be presenting to Congress is now up on their web site. Increased production of fuel efficient vehicles, and their plans entail rationalizing brands, models and dealerships, reducing costs, restructuring their capital structure, consolidating manufacturing facilities, as well as models and dealerships. They want $12 billion in loans, they will draw down $4 billion this month. They also want a $6 billion line of credit to provide a cushion if the "severe market downturn" persist.

November vehicle sales— ugh!:

GM down 41.3%
Ford down 31%
Honda down 31.6%
Toyota down 33%

None of these are far from expectations (GM was expected to be down 39 percent), but you can bet these will be the headlines tomorrow.

Note that no one was spared. In Toyota, the Toyota division, for example, was down 33 percent, but the Lexus division (high-end cars) was down 34.7 percent. In other words, high-end or low-end, it didn't matter.

Where is the bottom? I have noted the weeping and gnashing of teeththat accompanied yesterday's downturn, and the widespread belief that we have not yet put in a convincing bottom.

Lowry, the oldest technical analyst service in the U.S., best expressed this sour sentiment in a note this morning: "sentiment continues to see rallies as opportunities for selling rather than as harbingers of further gains."

But not everyone is so bearish. Laszlo Birinyi, a widely respected market analyst, argues in a note today that argue that "the stock market has bottomed."

The title of his report is, "S&P 750: The Bottom." This is a reference to the November 20th lows in the S&P 500 (752, actually). Birinyi and his associated Jeffrey Rubin and Cleveland Rueckert argue for a bottom based on several observations:

--market's response to bad news last week was encouraging;
--financials have shown leadership;
--sentiment is negative;
--technicians see no relief.

Birinyi makes two other points, both of them correct: 1) toward the end of declines, bearishness increases, and 2) he has had a good record of calling bottoms in the past.

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