Do Not Try to Second-Guess This Bull Market

Investors and traders who think they know better could pay dearly...

The current rally is just a wee bit over eight years, six months old. Any way you slice it, it's an incredible, though still not unprecedented, run since the Dow's low of 6,469.95 on March 6, 2009.

Now that the bull has reached a ripe old age, more and more talking heads are calling for its end on the basis of its "advanced" age alone.

I'll be blunt: Changing your bullish bias and acting on the assumption that the simple passage of time is enough to halt the rally is likely to cost you money - and plenty of it.

I can say that with confidence (and trade likewise) because, over my 31 years in the markets, I've learned exactly what ignites, what perpetuates, and, of course, what kills, a bull market.

I don't really see anything that suggests this one is spent...

Don't Miss Out on Massive Upside

Bull markets can last longer - a lot longer - than technical or fundamental data would seem to predict. And getting out of the market before prices tell you unequivocally "we've made the top" is hazardous to your wealth.

You'll see what I mean...

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Here's a graphic that ran in Fortune in March 2017, when the bull market turned eight years old:

bull market

This shows that we're in the thick of the the second-longest bull market since the late 1940s.

Interestingly, First Trust has used Morningstar data to show bulls dating back to 1928. Their graphic looks like this:

how long will this bull market last

That's a lot of data on one chart. (I do like the visual nature of it, even if it's formulated to keep you invested during what I'm sure the folks there on the "sell" side would tell us were "small drawdowns!")

But you can see clearly, just measured against the strength of the longest bull market, from 1990 to 2000, that an investor who pulled the ripcord and fled to cash today could miss out on nearly 18 months of gains and close to 170% more upside.  

Like I said, calling a top without good, hard, actionable evidence is hazardous to your wealth. I see no other course of action than to get long and stay that way. That's just what my Stealth Profits Trader readers did last week when we took down a 114% gain (our 35th triple-digit win) on Advanced Micro Devices Inc. (Nasdaq: AMD).

I made that recommendation because there were four different, not entirely unrelated, events last week that confirm to me that we're in between the "Trump/Growth" narrative and a Fed-driven narrative.

Both are exerting influence, but the Trump/Growth narrative is still predominant.

Here's what I mean.

North Korea lobbed a missile over Japan: The bellicose "little country that would" has one agenda, and that's to be taken seriously. They'll risk an all-out war to get that recognition. When the missile splashed down and the news sunk in, markets fell less than 0.9% before bouncing back. The resilience of this growth-narrative market was on full display in the reaction.

Then, of course, Trump tweeted about the missile test: His general (but inflammatory) tweet last Wednesday morning sent futures down a mere 0.2% before they recovered and went on their merry way.

And then there was the economic data...

Inflation data came in low on Thursday morning. An inflation measure called Core Personal Consumption Expenditures (PCE) came out and showed that inflation is slowing. The market responded by moving upward - showing that attention is being paid to the "Great Unwinding" Fed-driven narrative. Lower inflation means that the economy is not overheating and that the Fed's monetary tightening can potentially be postponed.

What's more, the monthly employment number was light: The non-farm payroll number showed that 156,000 jobs were added in August versus the 180,000 that were expected. The influence of that Fed-driven "bad news is good for the markets" narrative, which was so dominant in the years before interest rates began to normalize, sent U.S. stock indexes higher.

But make no mistake - I'm sure this low-volatility, grinding bull market will give way to a much more volatile two-way market. The narrative will change. It's a question of when, not if, but if you're keyed into that narrative, the "when" doesn't matter so much.

Still, the bottom line is this: Until the S&P 500 breaks below the 2,400 to 2,410 zone and decisively stays there, there's no reason - no reason at all - to rethink an overall bullish bias and a practical strategy of going "long." The biggest gains will go to the folks who ride this bull market all the way to the top.

You can get all of D.R.'s recommendations for squeezing every last dime of possible profit from this rally in his 10-Minute Millionaire. It's more than a trading service - it's an entire wealth-building system designed to get you to your first (or second) million very quickly. And it's completely free. Click here to get his updates three times a week.

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About the Author

D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.

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