Does The Bull Still Have Room To Run?

Saturday’s video featuring Bob Prechter supported the view that a potential top similar to 2007 has been formed. For an opposing view, take a look at “Bulls still fit to fight:”

Stephen L. McKee, editor of the No-Load Mutual Fund Selection & Timing Newsletter, says that while investors may be worried about a market correction, they should be looking for bargains.

During an appearance on the “Your Money with Chuck Jaffe” podcast, McKee described his timing style of trying “to sell as the market is going up and looking like it is turning over and, on the flip side, we start buying when things look like they are cheap and getting oversold and pessimism is rampant.”

That time to buy would be now, particularly for international and world stock funds, as well as small-cap funds, McKee said. Listen to the full interview with McKee.

McKee noted that the definition of a bull market is higher highs, but also lows that are higher than previous lows. While the current market has turned shaky and is off from its peak, it’s not making new lows. Within bull markets, McKee noted, you do get corrections.

“We’re down about 5% from the high, but we did not set up any new lows or go below any previous lows,” McKee said. “By definition, we’re still in a bull market.”

That being the case, McKee suggested that investors look at bull markets historically, and at how long they last and where they go.

“Even though the market has come a long way,” McKee said, “we’re still only at the beginning of its move. If it continues, compared to previous markets, we should go another year or year and a half and go up another 50% … based on other bull-market moves.”

There you have it; a totally bullish opinion. Only time will tell who will be right. Personally, I would lean more towards Prechter’s viewpoint. However, in regards to investing any forecast is meaningless, and my preference is to look at the actual trends, since only they represent the reality of the market place.

Right now, we are still in bullish territory, have our trailing sell stops established and will continue to hold on until the market tells us otherwise. In my book, that beats forecasting anytime.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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