07.23.2009
Bull Market or Bear Market?
original article written by Net Advisor™
This is still a Bear Market by definition.
No one has been able to successful define this as a true Bull Market. Bull Markets are not indicative of just price movements going up for a few months or longer; nor do they begin just because stocks were clobbered to nearly being wiped out for 2 years.
Bull Markets need something to create a new mantra that is ever growing at least for a longer term trend. The tech boom began around 1992 and that was a Bull Market that lasted until March 2000.
I see no unique situation that even comes close to some industrial change that spurs massive economic growth to be defined as a new Bull Market.
The market has stabilized over the last few months, but stabilization of a market would not equate a Bull Market.
The reality is that the economy is still fragile, consumers are still laden with debt, and mortgage defaults are still increasing not decreasing. There are over 300,000 new default notices went out in June 2009 and government spending is still out of control.
“U.S. foreclosure filings surpassed 300,000 for the third straight month in May and may hit a record 1.8 million by the first half of the year, RealtyTrac Inc. said.
A total of 321,480 properties received a default or auction notice or were repossessed last month, up 18 percent from a year earlier…One in 398 U.S. households received a filing last month.”
— Source: RealtyTrac
Mortgage rates are up .42% (almost 1/2%) since April 2009. I don’t see this helping the real estate market at all.
By all accounts this is still indications of a Bear Market.
It does not mean we can’t rally even for an extended period of time. The market rallied from Oct 2002 to July 2007, yet many stocks ended going lower in less than 18 months returning to their 1998-1999 levels. The S&P 500 bounced off around the 2002 lows, which is positive. The DJIA is still down 35% from its July 2007 high.
NASDAQ has never recovered to a new high since its March 2000 top – still off 57% to date.
I’m still not seeing the Bull Market argument here?
I am not suggesting we are going to run to new lows again right now or maybe not at all, but one cannot overlook that these events happened and thus we really have been in a Bear Market since March 2000.
I have argued that we have been in a “traders market” or maybe ranged bound at some point with volatility and short term trends up and down. I expect this will likely continue for years until the economy can truly stabilize.
Keep in mind that one can make money in Bull and Bear Markets. Bear market are not bad per se. They just mean one’s strategy has to change from long only or buy and forget to a more defense strategy. The right strategy really depends on one’s age, risk tolerance, time frame, personal situation, and over all goals. This is where an expert advisor can help.
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