OK so alot of people are bearish but what is the catalyst to reverse a 3 year bull market? Earnings has been good so far with 70% of the S&P beating. Any thoughts?
Bear markets usually start quietly with no real catalyst with regard to time. We all know the Nasdaq peaked in in March 2000 but why March? Why not six months later or six months earlier? The peak happened for no real reason, with regard to time. Bottoms get put in for no real reason. PE ratios can appear cheap or appear expensive for long periods of time and have not offered much predictive value for determining major turns.
This is why I like the 200DMA. It is one of several valid indicators for signaling a problem with demand for stocks. When demand for stocks is good you should own stocks. When demand is bad, you should not own stocks.
Because demand can appear bad but turn on a dime I would never advocate zero stocks but you get the idea. Regardless of my sentiment at any time, there is either a problem with demand or there is not. This is a simplistic view but I think simple is better.
For now there is not a problem with demand. There is the threat of a problem but no problem for now.
Wikinvest Wire
1 comments:
Hi Roger, great blog, keep it up.
If I recall correctly, I think around march 2000 was the time the corporate investor disclosure rules changed. Prior to that companies had closed-door analysts meetings giving them information ahead of public announcements. I believe this gave larger investors more confidence during the bull market. When the rules changed, companies had to annouce to everyone at the same time (I think it was march 2000). Thus analysts/large investors lost confidence that they would get 'advance warnings' and things started to seem more risky, the rest is history.
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