Will the Stock Market Turn Back Up Now?
Stocks had a rip-roaring day yesterday, after a few weeks in the dumpster. So will the bull market now resume?
Evidence certainly leans that way. Technical analysis shows stocks advancing within a long-established channel. And although prices are challenging the lower end of that rising channel, they have not breached support yet. Even if they were to do so, such action might only indicate a more serious correction to the ongoing bull market. The salient point being, simply, that the stock bull market, while long in the tooth, has by no means indicated it's giving up.
Reason begs the conclusion that the bull remains intact until much stronger evidence indicates otherwise. But reason also shows us that we may still face a strong correction, and if we do, that such correction would only scare some worthy souls, but should not necessarily shake out those same souls if they have the courage of their convictions.
Meanwhile, a much more interesting trend - the continued bull-market activity of the long bond, continues to draw little attention. Indeed, the consensus remains that the Fed will raise rates in 2015, and that as a result, yields on long bonds will begin to increase, making it dangerous to own long bonds. But, of course, we've been hearing this for how many years now? And still long bonds remain one of the better investment classes, in some years the very best investment class, to own.
As for what to do, we wouldn't make any inordinate commitments to any of these classes of investments. Balance, dear friends, balance. Always balance.
Evidence certainly leans that way. Technical analysis shows stocks advancing within a long-established channel. And although prices are challenging the lower end of that rising channel, they have not breached support yet. Even if they were to do so, such action might only indicate a more serious correction to the ongoing bull market. The salient point being, simply, that the stock bull market, while long in the tooth, has by no means indicated it's giving up.
Reason begs the conclusion that the bull remains intact until much stronger evidence indicates otherwise. But reason also shows us that we may still face a strong correction, and if we do, that such correction would only scare some worthy souls, but should not necessarily shake out those same souls if they have the courage of their convictions.
Meanwhile, a much more interesting trend - the continued bull-market activity of the long bond, continues to draw little attention. Indeed, the consensus remains that the Fed will raise rates in 2015, and that as a result, yields on long bonds will begin to increase, making it dangerous to own long bonds. But, of course, we've been hearing this for how many years now? And still long bonds remain one of the better investment classes, in some years the very best investment class, to own.
As for what to do, we wouldn't make any inordinate commitments to any of these classes of investments. Balance, dear friends, balance. Always balance.
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