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FINAL RUN

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The final run has begun.

It looks like what could be one final climatic run to all-time highs in the U.S. stock market has launched. For months we’ve been saying that typical bull markets end in an almost panic-like buying spree, as the bears finally throw in the towel and join the bulls, and so far we’re right on script.

In August the U.S. indexes officially set the record for the longest bull market in our nation’s history, over 3,450 days from the March 9, 2009 ash heap that was the Great Recession and one of the most frightening financial crisis since the early 1930’s.

And we think it still has a little longer to run.

We have been gearing up for this final run, ready to move if and when the market gave the sign, and the breakout late last month was just that sign.

How far can we go? As high as buyers want to take us, which according to our models could be 5% to as much as 15% from here, especially if we continue to see the perma-bears keep beating their doomsday drums.

Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.

But we agree that, “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.” So before you start getting all giddy about this record Wall Street run, remember a correction eventually awaits on the other side, and a fairly healthy one at that. We wouldn’t be surprised if the stock market pulled back 20% to even 30% within the next six months to a year just after this final run.

We would urge traders to remain sober and even wary over the next few weeks or months as everyone starts piling on. It’s going to eventually be “dumb money” chasing stocks higher, and you will want to eventually sell to them as the run comes to the end. Final stage blow off tops usually end before most people notice, so watch your stocks carefully for any signs of trouble, and be ready to cash the register.

For those of you with longer term time horizons, we believe the market could be significantly lower in the next six to twelve months, so you might ask if this last 5% to 15% is worth the risk. Just a thought.

Either way, enjoy what could be one final run, a last hurrah for this aging bull.


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