Money Morning Technical Trading Specialist D.R. Barton, Jr., has been a consistently bullish voice for months now. You can see it in his charts - charts that reflect an unprecedented, 89-year record string of days without a 3% drop in the markets.
Right now, D.R. is having an impressive streak of his own. His tight grasp of the all-important market narrative has brought his paid-up subscribers the opportunity to bank 51 triple-digit gains in 2017 - that's more than one per week at this late November date.
With no real end in sight to the markets' upward motion, our Members have been wondering if it's even possible for stocks to sink to any degree. So we thought it would be particularly useful if we asked this enthusiastic trader...
"Can this market even drop from here?"
Now, of course the markets could drop sharply behind some mechanical event: a cyberattack, a violent conflict erupting, or political upheaval of some kind. That's always a possibility, however remote.
But it's not clear whether there's a market case for a big, multi-percent, one-day drop at this point. After all, as D.R. likes to say, markets just don't fall out of bed from record highs.
The way he sees it, there are two leading candidates for "Black Swan" out there right now...
Big Pullbacks Are Getting Rare... but Not Impossible
When we asked, D.R. said...
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"Clearly the macroeconomic and financial market stars have aligned for quite some time. We haven't had even had a 3% overall pullback in the market in over a year - let alone in one day.
This has been one of the most persistent grinding bull markets in history. Every time traders and investors have started selling - even if to take some profits - they've been met with strong buying, over and over again."
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D.R. believes the current "Trump/growth" narrative that's been propelling markets skyward for more than a year at this point is strong, but by no means unbreakable.
"The catalysts out there for a big short-term or one-day move would be anything that broke market participants' confidence in the current economic growth narrative."
D.R. says the two leading candidates are...
"Fragmentation of the European monetary and economic union: This could happen if Brexit goes off the rails somehow... or, on the other hand, goes so well that other countries follow.
Europe is in the middle of a convincing financial recovery; an upset of that would in turn upset global markets."
"There's a similar case for China: Its economy is growing well and showing some signs of stability. Any upset in its banking system, stock market, or growth pattern would hit global financial markets very hard. Remember, Chinese stock market instability is what caused the big U.S. stock sell-off in August 2015."
The big takeaway: The markets are strong, not necessarily invincible. D.R. wants us to keep a bullish trading bias so long as the current narrative holds, and he'll be watching for a change in the weather that might warrant a pivot to the bearish side of the spectrum.
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