Where Are We In the Secular Bear Market?
Tuesday, January 8, 9:25 a.m. It seems to only be when the market is in a cyclical bear market that the financial media remembers that a secular bear market began in 2000. That is completely forgotten once a cyclical bull  market comes along within the secular bear, and everything is looking bullish again. As the [...]

Tuesday, January 8, 9:25 a.m.

It seems to only be when the market is in a cyclical bear market that the financial media remembers that a secular bear market began in 2000.

That is completely forgotten once a cyclical bull  market comes along within the secular bear, and everything is looking bullish again.

As the market again approaches its previous peaks of 2000 and 2007 this might be a more helpful time to remember that we are in a secular bear market, which requires an entirely different approach to investing.

First a reminder that a secular bull market is a long-term uptrend. Cyclical bear markets take place within it, but when they end the long-term uptrend resumes to ever higher highs. They are wonderful times for buy & hold investors, since the market always comes back and goes on to those ever higher highs.

A secular bear market is a long-term sideways to down trend, in which periodic cyclical bull markets take place that carry the market up to previous peaks, but then the next cyclical bear market arrives that takes the gains away. Obviously a disastrous time for buy & hold investing, and a great period for market-timing.

The last 110 years can be clearly divided into three completed secular bull markets, and three completed secular bear markets, with a 4th secular bear market currently underway since 2000.

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The secular bear market that began in 2000 continues to track similarly to the secular bear markets of 1900-21, and 1966-82. 

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Here’s what we’ve been reminding our subscribers of lately as the favorable season continues and we remain on a buy signal.

So far, we’ve seen the 13-year secular bear that began in 2000 follow the same typical pattern of previous secular bears.

And we’re well aware of the severe imbalances placed on the economy by the 2000-2002 market collapse, terrorist attacks, Iraq and Afghanistan wars, easy money policies, etc., which allowed only a market recovery back to the 2000 peak in 2007, when the housing bubble burst and led to the near total financial system collapse in 2008.

As in the 1970’s, it is taking unusual stimulus measures, record budget deficits and debt loads to recover from the disastrous decade.

And though each step has resulted in slow recovery, it will take at least one more setback for the economy and market, caused by austerity measures to tackle the debt problem, before the secular bear ends.

We need to be aware of that as we continue to navigate the cyclical bull market within the secular bear market.

But as in the 1970’s, the next cyclical bear is not likely to be as severe, and will likely finally end the secular bear market and usher in the next secular bull market.

And that next secular bull market will result in the Dow finally reaching 50,000 and beyond, that so many were predicting in 1999, (when in my 1999 book Riding the Bear – How to Prosper in the Coming Bear Market I was predicting that the worst bear market since the 1929 crash was right around the corner).

Why can we be convinced that once this secular bear ends and the next secular bull market begins the Dow will soar to 50,000 and above? Because in each of the secular bull markets of the last 110 years, the Dow has gained 500% to 1000%.

The problem for investors will be the number who have not handled the secular bear market well, have sworn off the market, and will not be enticed to participate again until the next secular bull market has been underway for years and the easiest money has already been made.

Market Is Still Short-Term Overbought..

As I noted in Saturday’s post, the market is short-term overbought and this is the week before the monthly options expirations week which is often negative (and the week of the expirations then tends to be positive).

So no surprise that the rally stalled yesterday, with the Dow closing down 50 points, as the overbought condition tempted short-term traders to take some profits, as an overbought condition usually does.

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As usual, the financial media either does not recognize technical conditions as a driver of markets, or insults the intelligence of investors by dumbing explanations down. And so the explanations are mostly along the lines of ‘markets are beginning to realize the fiscal cliff and debt problems that still loom ahead’, or that ‘professional and institutional investors returned from their extended holidays yesterday and began selling, not a good omen’, or the market was down yesterday ‘on nervousness over Alcoa’s earnings that will be released after the close Tuesday’.

No, it’s the short-term overbought condition that’s the problem.

To read my newspaper column from last weekend click here:   The Bond Sell-Off is Due to Become More Serious!

Subscribers to Street Smart Report: The new issue of the newsletter is in your secure area of the Street Smart Report website from Thursday. And an in-depth Global Markets Update from yesterday afternoon!

NOTE: There will be a new updated in-depth ‘Gold, Bonds, Dollar, Commodities’ report there later today!

Yesterday in the U.S. Market.

After the biggest weekly rally since 2007 last week, the market pulled back a bit yesterday. Trading volume was 0.6 billion shares traded on the NYSE.

The Dow closed down 50 points, or 0.4%. The S&P 500 closed down 0.3%. The NYSE Composite closed down 0.4%. The Nasdaq closed down 0.1%. The Nasdaq 100 closed down 0.1%. The Russell 2000 closed down 0.4%. The DJ Transportation Avg. closed down 0.4%. The DJ Utilities Avg closed down 1.1%.

Gold closed down $7 an ounce at $1,646.

Oil closed up $.10 a barrel at $93.19.

The U.S. dollar etf UUP closed down 0.3%.

The U.S. Treasury bond etf TLT closed up 0.1%.

Yesterday in European Markets.

European markets also mostly gave back a bit after their big rally last week. The Europe Dow closed unchanged. Among individual countries, the London FTSE closed down 0.4%. The German DAX closed down 0.6%. France’s CAC closed down 0.7%. Greece closed up 0.5%. Ireland closed up 0.1%. Italy closed down 0.4%. Spain closed down 0.2%. Russia closed down 1.6%.

Asian Markets closed down fractionally Sunday night and more last night.

The Asia Dow closed down 0.2% Sunday night, and down 0.9% last night.

Among individual markets last night:

Australia closed down 0.5%. China closed down 0.4%. Hong Kong closed down 0.9%. India closed up 0.3%. Indonesia closed up 0.1%. Japan closed down 1.1%. Malaysia closed down 0.2%. New Zealand closed up 0.1%. South Korea closed down 0.7%. Singapore closed down 0.4%. Taiwan closed down 0.4%. Thailand closed up 0.1%.

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Markets This Morning:

European markets are mixed this morning. The Europe Dow is up 0.3%. The London FTSE is unchanged. The German DAX is down 0.2%. France’s CAC is up 0.4%. Spain is up 0.5%. Greece is up 1.0%. Italy is up 0.6%. Russia down 0.6%.

Oil is up $.35 a barrel at $93.54.

Gold is up $9 an ounce at $1,655.

This Morning in the U.S. Market:

This week is a very quiet week for potential market-moving economic reports, almost none. To see the full list click here, and look at the left side of the page it takes you to.

There were no reports yesterday.

This morning’s only report was that NFIB Small Business Optimism Index rose 0.5 in December to 88.0 from November’s worst reading since March, 2010, and a level that the NFIB says is at recession levels.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 40 points or so in the early going this morning.

To read my newspaper column from last weekend click here: The Bond Sell-Off is Due to Become More Serious!

Subscribers to Street Smart Report: The new issue of the newsletter is in your secure area of the Street Smart Report website from Thursday. And an in-depth Global Markets Update from yesterday afternoon! and

NOTE: There will be a new updated ‘Gold, Bonds, Dollar, Commodities’ report there later today!

I’ll be back with the next regular blog post on Thursday morning at 9:25 a.m.

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