What the New Bull Market Will Look Like

By iamned - Last updated: Thursday, March 26, 2009 - Save & Share - One Comment

itle: What the New Bull Market Looks Like
Author: Cetin Hakimoglu

Positions: Google, Potash Corporation, Mastercard

A few week ago I wrote how the recovery in the markets would be ‘V’ shaped. What that means is that the rally in the major indexes would mirror the selloff at the nadir, hence exhibiting symmetry.

On Monday, March 23rd, the rally resumed yet again with unrelenting force on the heels of gains made in the prior two weeks. At this rate, we’ll easily end the week higher for the third time in a row. In my first article on seeking alpha (http://seekingalpha.com/article/123797-the-story-s-still-the-same-but-prices-have-changed), I warned that many short sellers would lose their shirts on the way up as a new bull market begins, and that seems to be the case now.

Regarding the prospects of the market, here is how I picture the rebound of the DJIA to 14,000 playing out:
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The chart on the bottom is where we are now. As you you can see, there exists symmetry in each of these time frames at the nadir. Interestingly, these screen shots were taken last Friday before Monday’s huge rally.

Here is another chart showing how the DJIA rallied from 2003 to 3004 when it gained 40%. As you can see, there were few major dips or breakouts; just a steady march higher once the bottom was made in March 2003:

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The next chart shows how these steady gains in addition to low low volatility can persist for many years as in the last bull market:
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The current bull market, which we’re in now will also play out in this way.

In conclusion, I emphatically believe that the market will indeed recoup all its losses within a few years, and this is because the US economy is still fundamentally strong (link:http://seekingalpha.com/article/124256-a-deep-recession-no-the-most-over-hyped-yes) believe it or not. PE ratios are extremely depressed due to lack of investor confidence, thus if the S&P 500 had a PE ratio of 20 instead of 13 it would be trading at 1,250 now. I’m still recommending buying stocks that benefit from a falling dollar, globalization, and rising commodity prices such as Google, Apple, Research In Motion, Mosaic Corporation, Mastercard, Potash Corporation, Visa, and Bidu.

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One Response to “What the New Bull Market Will Look Like”

Comment from Michael
Time April 20, 2009 at 10:42 pm

you are too much man. LOL

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