ULTRA-BULLS DOMINATE

dow

I have often spoken out to traders who are continuously bullish or bearish, citing old Wall Street Axioms that advise never be a bull or bear despite market trends. It is easy to crowbar reasons for being a bull or a bear.

The common reason is always political events affecting markets, with some suggesting that these are “Just anomalies,” and that changes in trends should reverse.

Except that I have come across numerous articles during my research for my PhD that suggest that global equities’ markets are in a bull phase – an Ultra-bull cycle, in fact. This means that the eight-year bull market we are experiencing still has some way to go before the predicted almighty crash happens.

I have come across an article by US market pundit Peter DeGraaf that suggests that since 1973, a different cycle has been dominant in world markets. Apparently, the US suffers a financial correction every seven years. The last one occurred in 2015, resulting in the “flash crash.” If he is correct in his assumption – backed by some serious other experts across the world – then we should not expect a major market dislocation until 2022.

“Of course, that does not mean there won’t be sell-offs or even major corrections,” he says. In other words, look for these corrections to build a portfolio of shares at below fair value.

My advice: On the charts, the Dow will continue to test its two-year range, so it should be an excellent buying opportunity if a correction does start in the new year. And even if it does not, with a few more years of gains still ahead, according to this super-cycle, the market still offers opportunity for investors.

Call me to discuss: jsrmagliolo@gmail.com

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