This has been a popular debate of late. Are we still in the secular bear or is it over yet? I’ve argued, from a very technical perspective, that the secular bear isn’t over until the global market index officially breaches the past secular highs and “breaks out” into a new bull market. We’re still about 20% below the old highs. But we’re likely closer to the beginning of a new secular trend than we are to the end.
“Some of the answers to these questions are purely quantitative, and do not require any human judgment. A few of these do require a squishier answer. After 36 months or so of capital outflows from equity funds, we should not rush to judgement after the first month of inflows.
And there is a major caveat to this: The Fed’s extraordinary ZIRP/QE intervention creates an impression of inorganic gains. Without the unprecedented FOMC actions, I am unsure markets would be anywhere near current levels.
Regardless of your answer to our broad question, there is one thing that I believe to be clear: We are much closer to the end of this secular cycle than to the beginning. Many optimists — most notably, famed technician Ralph Acampora — believe the secular bear market has ended. Even skeptics have to agree that we are more likely in the 7th or 8th inning than earlier stages of the game. Only the “America is Japan” crowd thinks we are in the 3rd or 4th inning.”
Read the full piece here.