USA Today says Bull Market About Over

USA Today says Bull Market About Over

First, comes what might still be called the early stages of the secular bear market in which valuations go down. And during the last four years, the PE ratio...

The business section of the USA on Friday had a feature article that said the Bull Market is just about over.

They basically said 1) we've been in a four year bull market since Feb 03; 2) bull markets seldom go beyond 4 years; and 3) the current uptrend of 9 months without a significant decline was almost unprecedented.

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And all that leads to a conclusion that the stock market is going down.

But the USA isn't the only one. Steve Sjuggerud (whose 1-2-3 model finally turned from red to yellow light mode in January, signalling stocks will go up) now says we're in for a dismal 7-8 months for stocks Jeff Clark, who writes a trend following report called the Big Trend, also predicts a market downturn.

Jeff isn't looking at trends at all. Instead he's looking for highly undervalued stocks that have the potential for a big move and if you look at what he's recommending, their charts look very "anti-trend."

So let's look at this four year bull market. First, comes what might still be called the early stages of the secular bear market in which valuations go down.

And during the last four years, the PE ratio of the S & P; 500 has actually gone down, confirming the secular bear effect. If this four year rally had come during a secular bull market it probably would have been 2-3 times as big.

And this price rally comes during a time period when the dollar has moved down 15%, weakening the overall impact of the up move. Furthermore, foreign stocks have generally outperformed the S & P 500; by a wide margin.

So is the "bull" market over? If USA headlines say it's over, then it probably has enough steam to at least last until all of this year's pension money has flowed into the market (i.e., until May).

Furthermore, I'm having trouble finding many negative efficiency stocks. But that says be long... it doesn't say run for the hills.

So in my opinion, we're still in a huge secular bear market, but the current up move (in which valuations are still going down), could easily continue through May.

But I'm just a psychologist/trading coach. I'm not a market predictor. What do I know?

FEBRUARY 06, 2007

Psychological Rule #12: Great Traders Have Certain Qualities

Richard Dennis made a bet with Bill Eckhardt that he could teach his trading methods to anyone.

However, what happened after that didn't answer the question. First, over 1000 people applied to be a Turtle and they were all given a short test.

Second, the top 40 candidates were then screened with an in-person interview. Third, of the ten initially selected, some didn't make it.

Sure, the Turtles as a whole are thought to indicate that Dennis won his bet. But if the bet involved teaching anyone, then it was clearly a failure.

I've always believed that if anyone can do something then you can teach someone else to do it to.

But even I have certain requirements in my super

trander program. I'm looking for people who are committed, who believe that they create their own trading results, and who have enough money for trading for the program to make economic sense.

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My bias has definitely shifted to "if you have certain qualities, then you can be trained to be a great trader."