iamned.com

We’re Still In a Bull Market

Even after Bear Sterns meltdown yesterday, the stock market remains well in bull market territory. The S&P 500 closed at 1388-still thirty six points above the critical 1252 level. A close below that level would officially herald a bear market, but it has yet to happen. The fact that stocks were able to hold up relatively well on Friday is a very bullish sign because it indicted that the majority of investors view the Bear Sterns blowup as in isolated event.

Remember the Enron and Worldcom blowups of Spring 2002? All the usual boo hoo hoo ers through this was the final nail in the coffin for US business, after what has been a huge bear market. Pessimism and negativity dominated the business headlines, as fears over further business scandals gripped investors.

But the panic was unfounded as there were only handful of corporate scandals, and by the Fall of 2002, just a few months after the collapse of Enron, stocks abruptly began a six year bull market. Maybe things weren’t so bad after all.

Here are some charts that illustrate my point. As you can see below, the DJIA is still above the jan 23rd level. After all of this negativity regarding recessions, bear markets, inflation, Bear Sterns, we still haven’t made fresh lows.

The longer trend for the DJIA (and stock market in general) is still very bullish.

In conclusion, now is a better time than ever to buy stocks. The bull market which began on October of 2002 ISN’T over.

One Response to “We’re Still In a Bull Market”