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Secular Bull Markets
The current secular bull market has astonished everyone, including this trader, as records are broken on a daily basis that no one alive can remember. Hell I’ve been trading for thirty years, having enjoyed the carnage and after math of Black Monday, 1987. Even CNBC’s coverage of the 30 year anniversary seems quite comical three months later. However, one common thread that we see unfolding in a similar fashion is depicted in the chart below.
Secular Bull – Present Day
In each case, a long period of consolidation (15 years average), which led to a secular bull market lasting more than 16 and 18 years respectively. The current secular bull is starting year number 6. Additionally, we saw what the 1986 tax-reform produced. Sure, we had the 1987 crash soon thereafter and we took three years to best that high, but we then went on the higher highs for another 10 years.
Secular Bull and the Current Environment
We do realize there are periods of consolidation and drawdowns, so we aren’t perma-bulls. That said, where are we in the current cycle? Do you see a sell signal? Me either.
The high low percent chart above would need to produce a sell signal for us to start thinking bearish analogies. The upper line chart would need to produce a bearish cross at a minimum and the histogram would need to drop below the zero-line to issue a confirmation.We see neither remotely possible in the next few trading days.
With this in mind we keep adjusting our stops higher, watching for institutional sentiment and breadth to tell us us when to start thinking bearish again.
This is a short synopsis, so if you want the full run-down, join us via LIVESTREAM today at 9:20 AM.
Happy Trading and Happy Fry-Day,
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