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Strategies & Market Trends : Longer-Term Market Trends
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To: ItsAllCyclical who wrote (1131)6/27/2008 1:54:45 PM
From: AllansAlias  Read Replies (1) of 3209
 
Imo Its, a lot has been forgotten in the years from 2002 to 2007. We are still working off the belief that it's a bull market. By broad measure, the market has gone nowhere since 1999. The strategies that worked in that rise from 2002 are ingrained in people by now. They have seen time and time again that all dips are false alarms and buying opportunities. I think these are precisely the people in a small bit of shock of late.

Right now, the OEX is back to the level first hit in early 2004, a mere 18 months after the 2002 low. It is getting increasingly difficult, impossible on many charts, to see this down as correcting only against the rise out of 2002. There is no trend anymore.

While a chart needs to work off oversold, hence the great sharp rallies always come in declines, it is not the case that stocks are cheap per se. Stocks are cheap only against excellent forward expectations. If the recession starts to bite some more, stocks are overpriced.
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