Historically, the best time to buy stocks is about four to five months before a recession ends. Assuming that the economy perks up in the third quarter, then March 9 will likely be the ultimate low for the S&P 500.
The S&P 500 has now made three significant lows, followed by three impressive reversals; on October 10, November 20 and most recently on March 9.
Interestingly, the stock market made a similar three-point landing during the 2002-03 market low. For eight months, from July 2002 to March 2003, the market bounced along the bottom.
Stocks were cheap and there was plenty of cash on the sidelines, but investors need that spark to get things going. The spark finally came when the statue of Saddam was torn down in Baghdad.
The level of uninvested cash is 150% higher now than it was six years ago. As the cash returns to the stock market, it could fuel an impressive rally that’s much stronger than the one we experienced in 2003. I sincerely believe that many of my favorite stocks could be up 30% to 50% in the upcoming weeks.