But
it seems to be true; we are in a bull phase.
To
review, here are the reasons why I think we saw a major bottom on the 3rd
of October.
10-yr bond yields are rising again after bottoming at depression
levels.
Breadth hit extreme low limits at the bottom – as low as the
2009 recession bottom.
Sentiment hit extreme low limits around the bottom.
The market was up 7-days out of 9-days after we made the 1099
low.
VIX fell more than 40% after the low of 1099 (although it has
come back some).
The market was up more than 1.75%, 3-days in a row after the low
– that has only happened after major lows.
Cyclical stocks outperformed the S&P 500 after the low.
The S&P 500 broke the old high of 1219 on 31 August and that
got the S&P out of its trading range.
Volume was strong in the afternoons after the low; that is when
the institutional boys move and that is also considered smart money.
All of these are indicators that 1099 was a major low. Bottom
line: the market should continue to surprise to the upside.
For Historical comparisons we have the following:
The market rebounded for 24-months
from 1974-1976 climbing 73% to be followed by a 19% decline that took place
over 17-months.
From 2009 to April 2011 the
market rebounded for 14-months climbing 78% to be followed by a 19% decline
that took place over 5-months. After the
1932-1932 bull-run there was a 23% drop in only 6-months so the short time for
a bear market has precedence.
Historically, the smallest increase in the next Bull phase
following a bear cycle was 29% in 1911-1912.
That would carry us to about 1420.
The shortest bull-cycle was 7-months in 1938;
The average Bull-return has been102%, lasting on average, 26-months. That would carry us above 2200…Time for
another famous stock market quote: “No.
No. That's not true. That's impossible!” To which I reply, “Search your feelings; the
high won’t be above 1550.”
The
NTSM analysis switched back to BUY today, Thursday.
I bought back into the stock market at
S&P 500 1155 on 7 Oct after the 6 Oct NTSM buy signal. I remain 100% long in the long term portfolio
(100% stocks in the 401k.). (See the page “How to Use the NTSM System” – the
link is on the right side of this page).
I
moved up to 75% long in the trading portfolio.
