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The 'Icahn bottom'? Where his call for doom stands

Carl Icahn: Earnings a mirage

When Carl Icahn put together an elaborate presentation on why he thought the stock market was in trouble, investors took notice — and started buying.

In fact, Icahn's doom-saying seems to have had just the opposite effect, with the market staging its strongest run of the year just as the famed activist investor pushed the opposite case.

Since his video, titled "Danger Ahead," hit Sept. 29 — followed by a CNBC appearance the following day — the has been on something of a tear, gaining about 7 percent and making a run at turning positive for the year.

It's a curious turn for someone more known for the "Icahn lift" that usually accompanies the stocks in which he takes an interest. Apple, Netflix, Herbalife and a slew of other companies have gotten significant bounces when Icahn stepped in.

This time around, though, things look different.

Carl Icahn
Adam Jeffery | CNBC

Icahn based his bear case on several factors, most notably earnings that he believes have been misstated and inflated by easy monetary policy.

Read MoreIcahn: I think markets are overpriced, earnings are misstated

No doubt, the market has come to depend on the Federal Reserve and the money printing and zero interest rates that have paved the way for more than $2 trillion in stock buybacks since the end of the Great Recession.

Icahn's warning, though, came amid heavy market volatility that may simply have exhausted itself by the time he made the rounds justifying his downbeat assessment.

"Many have noted Carl has been bearish for awhile, so his video is nothing new. Still, why did he take the time to actually make the video?" market strategist Ryan Detrick said in a blog post this week titled "Was That the Icahn Bottom?" "My guess is because things were so bearish just one week ago right now, he felt good about being bearish and decided to do his video."

Icahn did not immediately respond to a request for comment.

Detrick noted that stocks staged an important successful retest of their August lows, and sentiment had turned sharply bearish, enough so to serve as a contrarian indicator that a rally was at hand.

Read More The Fed is showing that the market matters most

Indeed, surveys seemed to flip back just after Icahn's video.

The American Association of Individual Investors survey showed its highest level of bullishness since March last week, with 37.5 percent believing the S&P 500 will be higher in six months, a number that is closer to the long-term average of 39 percent.

Investors Intelligence, which polls newsletter authors, also showed a jump in optimism, with bulls hitting 30.2 percent last week after touching a multiyear low the previous week.

To be sure, picking tops and bottoms is a tough game, and there's still a lot of technical damage to undo before even contemplating whether the market is in the clear from the brutal volatility bout in 2015.

Cash flows, for one, show continued investor unease.

Another $5 billion left equity funds last week, according to Bank of America Merrill Lynch. BofA's chief investment strategist, Michael Hartnett, said the stock market outflow, coupled with a massive $53 billion inflow to zero-yielding money market funds, indicates the market rally was "driven primarily by short covering rather than fresh risk-on" activity that would indicate a more solid foundation.

Read More This statistic suggests a 90% chance stocks will fall: BofA

Jim Paulsen, chief market strategist of Wells Capital Management, weighed in as well earlier this week, warning investors away from calling a bottom, an exercise he called "a fool's game."

"A quick recovery back near all-time highs would leave the stock market with many of the same vulnerabilities that started the correction," Paulsen said in a report for clients. "Consequently, we would not be surprised if the stock market tests its correction low yet again and perhaps even fails before reaching a final bottom."