MARKETCYCLE WEALTH MANAGEMENT

Published on March 20, 2021 and our near-term predictions (below) proved to be 100% correct.

I will attempt to make this month’s blog brief.  As I never tire of repeating, a bull market always zig-zags on its way up.  Market participants are naturally close to 50% bulls and 50% bears.  Everything, even politics, is divided roughly 50%/50%.  When the investor numbers skew to 51% bulls and 49% bears, then the market moves higher.  A bull market is a continued period where the bulls slightly outnumber the bears so the market goes up on most days, but not all… on some days, the bears win.  But over a long period of time, one would see a price chart moving from the lower left to the upper right.

We are currently in a brand new 7-8 year long Cyclical stock bull market within the confines of an ongoing 18 year long Secular bull market.  The market can’t help itself, it wants to grow when bullish conditions exist.

Stocks have now broken above their 12 year long bullish trend channel.  This is especially bullish as the stock bull market attempts to form an even higher trend channel.  The old top trendline has been turned into support and has been tested twice and it held both times.  IMO, this thing is going much higher despite the naysayers.  This is a very strong bull market.  People worry that we keep hitting new record highs, but we better get used to it since new record highs will be hit continually between now and when this thing ends.  The end is likely still many years away.

Every day of my life I do an extensive market review.  I try to let go of my opinions and predictions and just look at everything with fresh eyes.  This is what I saw this morning, in no particular order:

1. Growth stocks still lead value stocks, although value will be slowly strengthening over the next decade.  Momentum is a good way to play this as it will pick up the strongest of both categories.
2. The U.S. still leads in relative strength, although global stocks are perking up and especially emerging markets.  Emerging market stocks may have some short-lived and near-term weakness.
3. Breadth of momentum is very strong (but still weakest in small-cap stocks).
4. Breadth of technology stocks has now shifted again to strongly bullish.
5. Breadth of the stock indexes is very strong.
6. Divergences are pointing to very bullish.
7. Sentiment has now shifted to “not excessively bullish”… which is bullish.
8. The consumer is strengthening… which is bullish
9. Inflation remains at low levels but continues to strengthen… which is bullish.
10. MarketCycle’s indicators suggest the the Federal Reserve will remain on hold through all of 2021… which is bullish.
11. Bonds are oversold and near very strong support and MarketCycle’s proprietary “Bond-buy Indicator” has just triggered.
12. The USDollar is holding above its secondary level of support.  It does not have much of a reason to go either up or down; the temporary near-term direction may be up.
13. Gold remains above both its 3 & 5 year support lines and it is no longer overbought.
14. Commodities may show temporary and fairly shallow weakness in the near-term.

SUMMARY:  Likely near-term directions = stocks strong and up, bonds bounce up (and rates down), USD and gold gyrate sideways, commodities temporarily weaken (but not a lot).  We are about to go into a corporate earnings boom which may last another year.  There is money sloshing around everywhere and this will stimulate the economy and stock market over the next year.  In my opinion, we are in the multi-year stock bull market of our lifetimes  (although any downturns will still need to be avoided in order for portfolios to excel).

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