Stock Market 2014: "We've Got a Lot Higher to Go"

Speculators can't make heads or tails of the stock market in 2014. Some say this bull has grown long in the tooth.

We disagree.

"We've got a lot higher to go," Money Morning Capital Wave Strategist Shah Gilani said yesterday (Tuesday) on FOX Business' "Varney & Co."

First, let's take a look at the signs that have naysayers predicting this bull will run amok…

These Ill Omens Beset Stock Market 2014

stock market 2014

As of last week's close, the current bull market – defined as a period in which the S&P 500 gains 20% or more – ranks as the sixth longest since 1928, according to Bespoke Investment Group research.

Historically, most bull markets last from 50 to 67 months. For instance, the bull market that began in 1982 lasted around 60 months, climbing approximately 160%, before the stock market crashed in 1987. In 2002, a bull market lasted 60 months, climbing around 83% by 2007; then subprime woes began and triggered 2008's market crash.

Thursday marked our current bull market's 60-month anniversary, raising investors' hackles.

The past two bull markets were immediately followed by crushing bear markets, and the 2007-2009 fallout was the worst since the Great Depression.

Meanwhile, Sunday marked the solemn five-year anniversary for the low point of that market crash. The markets have steadily increased since, in large part on stimulus from the U.S. Federal Reserve's quantitative easing (QE) policy it initiated in 2008 to stanch the bleeding.

But in January, the Fed began unwinding QE, cutting its monthly bond purchases by $10 billion a month (to $75 billion). The taper will likely negatively impact equity markets as fewer U.S. Treasurys and mortgage-backed securities are bought each month.

Note: The Fed's 2014 taper means volatility ahead. So we've outlined how to find profits in a volatile market – like triple-digit gains in just days – if you start with this strategy…

Here's what the bull naysayers are missing as we continue forward in 2014…

Still, a Bullish Year – With This Important Caveat

The stock market in 2014 still has plenty of room for growth.

"This is just the first leg of a generational bull market," Gilani said.

A generational market is a long-term market cycle that has averaged about 25 years in duration over the past 112 years. Within a generational market, many cyclical, shorter-term bull and bear markets can also occur.

Indeed, Gilani warns there will be steep falls here and there – including a market correction, defined as a decline of 10% or more, early on in the New Year.

"I think we'll see one in the first quarter. If we don't see a large correction in terms of the general market, I think we're going to see rolling corrections through several industry groups, and some of them could be quite steep," Gilani commented.

Still, he could see the markets reaching 17,000 before any correction occurs. Watch as Gilani makes his case for the stock market in 2014 in this short clip from yesterday's "Varney & Co.":

In pre-market trading today, the Dow Jones Industrial Average fell 0.41%, closing at 16,351.25. The Nasdaq slipped 0.63% to close at 4,307.19. The S&P 500 dropped 0.51% to finish at 1,867.63.

This stock has a huge profit opportunity ahead of it, and you're going to want to buy shares now… before Google does.

Join the conversation. Click here to jump to comments…

  1. H. Craig Bradley | March 12, 2014


    Of course, everybody wants the market to go up and over long, very long periods, it does have a tendency to do that, but not straight-up. There can be plenty of cyclical bear markets and corrections along the way. As the saying goes, "Shit Happens". So, if you are 100% in the market and one of those 'little things' does happen ( such as a recession now and then) you may get whacked.

    Some managers indeed are pretty good at getting a real time pulse on the economy and then employing "tactical management" ( get out while the gett'en is good ). However, most managers are not good at market timing or seeing the next event or recession until its obvious to everybody else. By then, most other people have already sold and the market is down. So, it may be more effective to first get your allocation firmed-up to where you want it and then ride it out IF you have 20 more years.

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