Written by Gary
Weekend Market Commentary: Part II: Don't Step In Front Of A Runaway Train
UPDATED: 0915 EST 2014-09-14
That light at the end of the tunnel just might be a train coming your way, don't stand on the tracks! This Bull run has a way to go and any dips along the way are going to be buying opportunities for the savvy investor.
The next two years should continue to be an investors playground and here are some reasons why.
News and events this past week did little to keep the market from setting new closing highs.
The fuel to propel the market to new highs may be at risk of being depleted, even while some may see the lack of investor interest as a contrarian indicator.
Stocks with recent bad news may offer some good opportunities, especially if having recently trailed the S&P 500.
While much of the week was spent on discussing the tragic sequence of events leading to the death of Joan Rivers, markets still had a job to do, but may have been in no position to stop the momentum, regardless of the nature of more germane events.
I continue to believe that QE will end, as planned, in October, unless something drastic occurs in the economy, as I had clearly stated earlier. I don't anticipate anything drastic, but neither do I expect the Federal reserve to sit and watch passively in the event that something unforeseen does occur.
Personally, I'm all for this runaway train to keep running, just as long as it does so at a reasonable speed, so that there's plenty of opportunity to get off.
So say we all! When someone tells you there is a light in the tunnel it just might be the train bearing down on you and I wouldn't advise standing in the way. 'The sheer momentum of a heavy projectile moving at high speed is hard to counter.'
Right now, a stock market extreme is pointing to higher stock prices from here...
On average, stocks fell just 1.4% more after the NAAIM bottomed. And three months later, stocks increased around 6%, on average.
Importantly, as of last week, the NAAIM has ticked higher off the bottom we saw earlier this month. History shows that we should expect new highs from here... not continued losses.
The NAAIM has one of the best track records I've seen. And today, the NAAIM has bottomed from the recent mini-correction and bounced higher.
History is clear. When this happens, stocks move higher over the next few months. I expect that to continue from here.
The bottom line here is that the indices have more room to move up and carve out more historic highs, for the time being anyway. The conditions necessary for a continued bull run depend on many things and we may soon be running into financial barriers that will eventually upset the bulls apple cart.
Obviously, this five year bull run can't go on forever as there has NEVER been a run that has lasted over ten years. It is expected, according to some analysts, a full fledged bear market will start in or around 2016 accompanied with another recession.
So there is time to sit back and 'clip your coupons' as they say. There is a nice dip coming our way, get rid of your dogs and BTFD!
Short of a nuclear war, this market will continue to rise. What are your thoughts? I would love to hear from you.
"The stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction. Where that is, I do not know." - Alan Greenspan, July 30, 2014
(Follow Closing Market Averages at end of this article)
US Dollar closed Friday at 84.45 -0.02 (-0.03%)
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Written by Gary