Archive for the ‘bear market’ Category
The Next Step for the Stock Market
By Michael Lombardi, MBA for Profit Confidential
For the benefit of my new readers, and as an update for my long-time readers, today I want to talk about exactly where I believe we are in the stock market.
After a 25-year bull market in stocks, which was fueled by a 25-year decline in interest rates and a period of great financial leveraging that accompanied collapsing interest rates, a Phase I bear market (often referred to as the first down-leg) brought stock prices down sharply.
From its high of 14,164 in October 2007, the Dow Jones Industrial Average crashed to 6,440 by March 2009—a 55% drop. This phase of the secular bear market is behind us.
A Phase II bear market (often referred to as the “rebound,” “bounce” or “sucker’s rally”) started in March of 2009. The Dow Jones Industrial Average has risen about 100% since March 9, 2009.
The bear market has been doing an excellent job during this current phase of luring investors back into the stock market. Phase II bear markets give investors the false impression that the economy has turned the corner and that stocks are a safe bet again—exactly where we are today. This phase of the secular bear market is still upon us.
Given that 2012 is a Presidential election year in the U.S., given that the government and the Fed have fought the natural forces of this bear market tooth and nail, the bear market rally, the “bounce” in this secular bear market, has been long.
Phase III of the secular bear market is when stock prices come crashing down again, bringing stock prices down to the point at which the … Read More
Exactly Where We Are in This
Secular Bear Market
By Michael Lombardi, MBA for Profit Confidential
In a secular bear market, which is where I firmly believe we are today, there are three phases:
A phase I bear market (often referred to as the first down-leg) brings stock prices crashing down. From its high of 14,164 in October 2007, the Dow Jones Industrial Average crashed to 6,440 by March 2009—a 55% drop. This phase of the secular bear market is behind us.
A phase II bear market (often referred to as the “rebound,” “bounce” or “sucker’s rally”) started in March of 2009. The Dow Jones Industrial Average has risen 89% since March 9, 2009. The bear market has been doing an excellent job during this current phase of luring investors back into the stock market. Phase II bear markets give investors the false impression that the economy has turned the corner, that stocks are a safe bet again. This phase of the secular bear market is still upon us.
Given that 2012 is a Presidential election year in the U.S., given that the government and the Fed have fought the natural forces of the bear market tooth and nail, the bear market rally, the “bounce” in this secular bear market, has been long.
Phase III of the secular bear market is when stock prices come crashing down again, bringing stock prices down to the point at which the phase I bear market started or lower—in this case, 6,440 on the Dow Jones Industrial Average, about 50% below where the stock market sits today.
Yes, I’m sure many of my readers are sitting there, reading this, and saying, “Michael, this can’t happen. Our economy would crash … Read More
We’re in a Breakout, But Is It Just
Another Bear Market Rally?
By Mitchell Clark, B.Comm. for Profit Confidential
While we’ve had an uptick in manufacturing, retail, and housing starts, economic data are not strong enough to get investors to participate in the stock market. There remains a sense of gloom hanging over the economy with the very real possibility of a U.S. recession happening again next year. If this happens, then it’s fair to conclude that current stock market trading action is really just a bear market rally. In a sense, I think the same thing is occurring in theMain Street economy—it’s a bear market rally in economic activity after a sustained period of weakness.
Why Michael’s Feeling Vindicated
this Morning
By Michael Lombardi, MBA for Profit Confidential
How do I feel this morning? Vindicated.
I’ve been writing on these pages for months that the stock market has been in a bear market rally that started in March 2009 and that stock prices would move higher before Phase III of the bear market ultimately sets in and brings stocks back down to their March 2009 lows. Over the past few weeks, I’ve been getting e-mails from my readers telling me that I’ve been in “bear market rally” mode for too long and that the markets were done…the bear market rally was over. And, presto, what do we get? A single-day 490-point jump for the Dow Jones Industrial Average yesterday—its biggest one-day gain in years!
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