It is a bull market. Those that tell you its still a bear market rally need to be sent as specimens for the Museum of History. We are gapping up modestly today, about 4 points from the cash close, after a strong final 15 minutes of trade. Despite China jitters with removing liquidity and being down 3%, the markets are gapping up. This in addition to the few points tacked on in the 15 minutes after the stock market closed.
The market should oscillate in the first hour, after which we should resume the ongoing trend. ES 1142 to 1144 remain end of day targets. I am staying long.
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4 comments:
Why does it matter if it is a bull or bear market? Can't we see a 10% correction within the context of a bull market? Wouldn't a 10% move lower be just as painful in whether the market is labeled bull or bear?
A 10% move lower is much more common in a bear market than in a bull market obviously.
Tactically, trading in bull markets and bear markets is different. Bulls are dull, with sharp and brief selloffs, regaining old highs within a month or two. Bear markets also have sharp selloffs, but don't rebound to their old highs.
Thus, my emphasis on this being a bull market.
Nice trade yesterday.
Semantics. The US has a long and painful restructuring ahead of it. Corporate profits will eventually collapse as the stimulus wears off and nobody wants to buy anything. There is inflation or a tax hike down the road due to the structural budget deficit. A bursting of the Chinese stocks and real-estate bubbles would cause all sorts of turmoil, including a spike in the dollar that would undo the stimulus effects on exports of the weak dollar. The bottom line is a big hit to earnings and a likely rise in risk aversion, which spells doom for stocks at some point.
We are entering a Japan scenario. The only thing that could stop the slide is a much bigger budget deficit, but the Republicans and blue-dog Democrats will not allow that, and even if they did allow it, such massive money-printing could boomerang and cause a collapse of the dollar and hyperinflation. After all, we are not self-financining like Japan was. Go take a look at the Nikkei chart since 1989. Lots of 50% up moves. I call those bear-market rallies, but if you want to call what happened to the Nikkei from June 1995 to May 1996 (from 15437 to 20693), just to cite a typical example, a bull market, go ahead.
IMO, you got it right during your 2010 predictions. Stocks are going to collapse hard sometime in the last half of the year.
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