"There is a lot of discussion of where the markets currently are, where we may go, but very few people zoom out to look at where we have been and when I say zoom out I don't mean a 5yr or 10yr view but rather a 100yr view
To really get an idea of where we may go I think it is wise to look at the last century. To do this we must study the DOW as it is really the only reliable chart going back that far
What becomes clear is that going back to 1900's is that the markets move in broad 5yr-20yr "SECULAR" phases of either Bullishness (up) or Bearishness down or sideways. What most people fail to realize is a 15yr flat or sideways market is extremely bearish as stocks have had zero growth and so their value has been eroded by inflation of at least 3%-5% per annum
So when we understand these SECULAR moves it becomes clear that regardless of how bad the news or events seem at the time ie World War 1 The Great Depression World War 2 the Cold War The War on Terror and now the War on Debt markets stay within their SECULAR trend
Whats also clear from the zoomed out view is that the current SECULAR trend we are in is a bearish sideways consolidation pattern that goes back to 2000 and will probably last until 2015-2018 at most at which point a new SECULAR BULL Market will be born and I'm betting all this money that's been pumped into the system will be the main cause of it as cheap easy money always fuels asset bubbles, always has always will
So back to where we are now within a SECULAR BEAR MARKET, all is not lost though as within these Secular phases we get smaller Cyclical phases which also can be either bullish up or bearish this time down not sideways.
For example from 2000-2003 we saw a Cyclical Bear Market taking the DOW down to the 7,000 level we then saw a Cyclical Bull Market from 2003-2007 taking the DOW to 14,000 again a Cyclical Bear market occured from 2008-2009 taking the DOW down to the 6,000 level and now we are currently in a Cyclical Bear Market.
While its a bit hard to see these Cyclical moves clearly on the DOW, the S&P 500 shows this channel much better, where as the DOW appears to be a Broadening formation
The point is no matter what the bad news US Markets should not go too far below their 2003 and 2009 lows as this will put them below their SECULAR Support Levels. Also as important the US Markets should not breakout from their previous highs of 2000 and 2007 by much until they are ready to begin their new SECULAR BULL Market view up which I don't think are just yet.
Bottom Line the higher the US Markets go and the closer they get to the SECULAR Highs formed in 2000 and 2007 the more cautious investors need to be"
The US is approaching new highs and I am of the FIRM BELIEF that there is no way a new SECULAR BULL MARKET is upon us and so at some point the US Markets will move back down into the "Secular Range" its been stuck in since 2000
For now the trend is up and dont fight the trend I am still buying stocks but I am aware of what may be coming in a few weeks/months.
So if I can leave readers with anything its be informed of what may be coming around the corner and remember this is just my opinion and I could be wrong
