Bear or Bull Market?

Forget the historical measures. They've been debated and argued for years. Does it even really matter? In a market that is arguably unique in many ways, I think we lose sight of what's in front of us as we try to impose some kind of certainty to market conditions such as whether this is a Bull or Bear market.

I often hear traders talk about patterns in reference to bull or bear markets. More than likely you've heard these references before; we're in a cyclical bear market or we're in a secular bull market. Occasionally someone will posit that one is occurring within the other.

Right now, some traders are steadfastly approaching this market as a bear market and executing their strategy accordingly.

The problem is, and I think this is what gets many traders in trouble, the market is not currently acting like a bear market. Ergo if you continue to apply bear market rules in a market acting like a bull you run the risk of being on the wrong side of the market until that market changes character again. And it can act contrary to one's expectations for an extended period of time.

I believe this is still a bear market, but the character has changed to a bull market. Until that character changes, I think it may be prudent to treat this market as a bull. Volume to the downside would be a good indication that things have changed, so until that happens (triggering a SS sell signal) I plan to hold on and ride this bull.

 

[Birchtree]

I'm keeping an eagle eye on the weekly 14 period RSI. Above 50 is a bullish condition. Looking at the character of relative strength as the 2003 bull began it stayed consistently above 50 for five quarters and pretty much went straight into overbought territory once it initially crossed the 50 demarcation line in the first quarter of 2003.

 

[coolhand]

I'm keeping an eagle eye on the weekly 14 period RSI. Above 50 is a bullish condition. Looking at the character of relative strength as the 2003 bull began it stayed consistently above 50 for five quarters and pretty much went straight into overbought territory once it initially crossed the 50 demarcation line in the first quarter of 2003.

That's a good measure to watch BT. I'd be very surprised to see the current bull go 5 quarters, but I'd be happy with a mere couple of months. For now anyway.

 

[Boghie]

I think we have all seen these charts. I get them from 'Calculated Risk' - who admitted to be bullish within the great bear recently...

And, from the same primary site, if one considers us in a cyclical Bear Market starting in 2000 (inflation adjusted chart):

Interesting chart, but like that technical guy on the radio (Moe Ansari makes me smile a bit) the waves and peaks and troughs seem to move with the whim of the day - only to be defined in the decades following...

 

[coolhand]

Hello Boghie,

Yeah, I've seen those charts before. And you're right, they seem to be defined years later.

You were right about my jumping into the market shortly after you did. I expected I would, just couldn't get that dip I was expecting. Sometimes you just have to pull the trigger. But I didn't wait too much longer.

 

[Boghie]

CoolHand,

You make reasoned moves in and out of the market. You have a system (or complimentary systems). I am new to this and am still finding my way.

So far, the instinct thing and a very simplistic review of long term charts and trends have kept me somewhat safe.

Happy hunting in the C/S/I. I think this boom will last through summer. Then we see about the Fall and onward. I can't see how current government actions will help long term – so on that end I am very bearish, but it may be a stupid prejudice rather than reasoned thought.

 

[cruiser2012]

Issue is the dollar is being devalued so foreign stocks will get more expensive in the long run. In 2011 expect a large increase in fees and taxes. Right now the 4500 dollar rebates in cars, low cost financing for new homes and Alt Energy credits will all contribute to a GDP growth that will in the short run stabilize the markets.
Take advantage now before the taxes and interest rates rise. When you see Volcker come in, get ready. BTW why are you only in TSP? I've got stocks and bonds with an online broker. I can do shorts, ETF's, stocks, 8% corporate bonds etc etc. I have a stock Roth IRA with them. People, learn to diversify and learn how markets work, I made 5000 in 2008 in my TSP by trading. I quit when the swings got too violent and quick. Schwabb, E-trade, Ameritrade...anyone of them. They are like regular brokers only cheaper. And BTW remember it's real money, not for play.

 

[coolhand]

When you see Volcker come in, get ready.

Do you have any idea how old he is? Ain't gonna happen.

BTW why are you only in TSP?

Why would you draw this assumption? I have several accounts.

I've got stocks and bonds with an online broker. I can do shorts, ETF's, stocks, 8% corporate bonds etc etc.

So do a lot of the rest of us.

People, learn to diversify and learn how markets work, I made 5000 in 2008 in my TSP by trading.

I'm not sure what you're point is here. A lot of folks on this board made far more than you did.

I quit when the swings got too violent and quick. Schwabb, E-trade, Ameritrade...anyone of them. They are like regular brokers only cheaper. And BTW remember it's real money, not for play.

If you're going to post in my blog, make sure it's not with an agenda and please don't talk down to any one. That's a great way to get your comments deleted.