Clients may take it for granted that I am bullish during a bull market.  I mean, what else would I be?  I sometimes quote my (famous) investor acquaintance, Ed Seykota, by saying:  “It is not logical to be bearish in a bull market.”

Well, most investors are still illogically bearish, and this includes professionals and major institutions and even the paid analysts that so many investors depend on.

When one “shorts” the market, they are betting, with their hard-earned money, that the market is going to fall sharply.  Right now, we have the biggest hedge fund ETF short position in the history of the universe.  This makes me very bullish because most people are always wrong… when sentiment is too bearish, it is a very bullish signal.

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And we currently have the most money, in the history of the universe, still sitting on the sidelines, waiting & wanting to move into the markets but too afraid to make the move, although it will.  This makes me long term bullish since much of the $7,250,000,000,000 will slowly enter the market over the next few years.

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Currently, most investors are still selling into any rallies (see the red area at the far-right bottom).  This makes me very bullish.

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But when the stock market drops 18% and then (“V” shaped) recovers as quickly as it just did, then the market tends to just keep moving higher (see the green vertical lines as compared to the S&P-500 over the past 55 years).  This makes me very bullish longer term.

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Currently, there are 34% more home sellers in the United States than there are home buyers.  This will lower home prices, which will lower inflation (because 55% of inflation is being caused by high home prices), which will allow the Federal Reserve to finally be able to lower interest rates, which will be extremely stimulative for the entire stock market, including the very undervalued small-cap stocks.  Lower yields would also offer lower rates on new home mortgages, so that stimulation would put somewhat of a floor under home price losses with, perhaps, strengthening home prices showing up again sometime in 2026.

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SUMMARY:  I’m watching provisions in Trump’s “Big Beautiful Bill” and how it affects U.S. investments by U.S. citizens and by overseas investors; I’ve probably read more about the bill than have most members of Congress.  There is certain to be a battle getting approval for the bill because Trump’s program would increase the U.S. deficit by a whopping $5.8-Trillion (which defeats any legitimate purpose of DOGE… which is now to continue under the leadership of Peter Thiel).

The economy (and housing) is starting to weaken.  Stocks lead the economy… stocks were weak, but they are steadily getting stronger.  And now it is the lagging economy’s turn to weaken as stocks now get stronger.  It is likely that six months from now, in the late Fall, both stocks and the economy will be strong at the same time and remain strong for an extended period.

So, I remain bullish.  I am still bullish on U.S. stocks but have also added Developed Market stocks to our mix (such as Euro area, Northern Europe, UK and Japan).  The USDollar, despite its recent weakness, is still within the walls of its bullish trend channel, but I still also hold gold bullion which is “anti-dollar.”  Artificial intelligence and innovative-disruption stocks will lead the way higher over the next few years.  Big banks will gradually be funding new (IPO) Initial Public Offerings of innovative new baby companies, and both will profit.  Growth stocks will continue to beat value stocks over the next few years, until they fall out of grace in the 2030’s.  Of course, we will continue to get zig-zagging (often Trump caused) volatility and occasional downdrafts.

And we will eventually get the big bear market that is always promised at the end of ALL secular bull market cycles (as in the technology based Dot.com bust in 2000), and that will offer additional profits because it will finally be the correct time to “short” the market.  Again, a “short” is a bet that markets will drop.  But at that “end-times” event, we will be the rare short holder and most of the market participants will be euphorically bullish and buying on every dip, as the market drops (and drops and drops) over a, perhaps, two year period.  But that is not now and it is not soon.

Although everyone else is highly negative, I’m so (patiently) bullish that I’m almost giddy!

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Thanks for reading!

MarketCycle Wealth Management is in the business of watching over the investments in your brokerage account.  The entire process is easy.  We try hard to earn our keep. 

The REPORT website can be visited via the connecting link on the main website.

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MARKET CYCLE  —  TREND FOLLOWING  —  MOMENTUM  —  RELATIVE STRENGTH  —  HEDGE FUNDs

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My last few blogs have been long, so as the pendulum swings, this one will be somewhat shorter.

We are in a secular stock BULL market that started in the Spring of 2009.  Historically, they last for around 20 years.  Secular stock market cycles are long cycles that determine the prolonged strength or the weakness of the markets.  When we are in a secular stock BULL market, the bullish periods will be exceptionally strong and the bearish periods will be less significant.  This current secular BULL cycle likely ends in the Fall of 2028 or the Spring of 2029… I’ll know when we get closer to the end.

We are also in a concurrent and overlapping cyclical stock BULL market that also likely runs until the Fall of 2028 or the Spring of 2029.  Cyclical stock BULL markets run for around 6 years and this one started in the Fall of 2022, at the bottom of the 2022 bear market.

20-year secular bull cycles usually contain three 6-year cyclical bull market cycles plus two bear markets.

The two cycles, secular and cyclical, may end together in late 2028 and both would move in unison into a combined secular AND cyclical bear market which, if history proves to repeat yet again, the combined bearishness could end in a monster bear market crash.  Perhaps the worst in history.

Crashes can be more rapidly profitable than can be any bull market.  I made most of my personal money by shorting the entirety of the crashes of 2000 and 2008.

But right now, a super-strong and unstoppable bull market continues higher; I expect the final couple of years of this bull market to be parabolically strong with a market emphasis on artificial intelligence, robotics and innovative technology… sort of a super-copycat of the late 1990’s Dot.com technology bubble.  If I am correct, people will be obtaining margin loans and mortgaging their house to get hold of extra money to invest in the stock market; a dangerous pursuit because these same people will get themselves trapped in the eventual bear market.

What will cause the next giant bear market?  Massive U.S. government debt (Trump and the Republican Congress members are well into the process of passing a gigantic debt increase, mostly for tax savings for the top 5% and for military weapons, via Trump’s “Big Beautiful Bill.”  This follows Biden’s out-of-control spending habits).

A headline from today’s CNBC financial website:

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So, how will we fund our debt?  It is normally done via the U.S. selling Treasury bonds.  But now, nobody wants to own U.S. Treasuries.  I am writing this article on May 21st and today’s Treasury Auction was a complete dud and the stock market, that was flat, dropped 800 points on the Dow within minutes of the auction.  Treasury bonds are essentially loans given to the U.S. government.  Right now, nobody wants to loan the U.S. government any money.  Most of MarketCycle’s client accounts own NO Treasuries.  So, to fund our rapidly growing debt/deficit, the U.S. will “print money” and buy its own debt via a “not talked about” Quantitative Easing process… which will work… until it doesn’t.

This process of “printing money” to buy our own debt, coupled with Trump’s tariffs (which are entirely paid for by U.S. corporations and U.S. consumers) will create high inflation.  High inflation makes the cost of servicing the debt rise and rise and rise to eventual unpayable levels.  Specifically, this is what will cause the coming debt-ridden bear market.  Unpayable debt and inflation that would be impossible to stop without the Federal Reserve raising interest rates beyond 20%.  Yes, that is what I believe.  I saw rates go to 19% in 1981.  My first home mortgage was at 16%… and I was too dumb (and unstoppable) to understand that 16% is problematic.

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Right now things are good in the markets; where should we invest?  Below is what the market itself is telling us to hold (and this is primarily where MarketCycle’s client accounts are positioned, although I am not suggesting that you should do the same):  innovative technology, mega-cap technology, financials (large banks), consumer services and small to mid-cap utilities.  Momentum stock ETFs would hold primarily those sectors just mentioned, and particular momentum ETFs are often winners (but some are poorly designed).  We should also add “crypto” into the mix.  REITs may not do as well as during past bull markets.  Industrials should (eventually) get stronger again as the new administration in the White House backs further away from their destructive tariffs.  At the end of this final super-bull market, energy will also get strong, just as it did during the Dot.com bubble bull market.

Invest in assets that generate outsized profits (Chart courtesy of Datatrek):

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Artificial intelligence, which offers humans astounding benefits along with accompanying terrifying consequences, will soon be the big (big!) money maker and its profit potential will continue to be under-estimated.  My opinion is that the creation of artificial intelligence is unstoppable… sort of a modern “manifest destiny.”  (Chart courtesy of Morgan Stanley.)

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Certain “momentum” ETFs are often a good method for catching the best assets during the best times, although they have to be watched carefully during downturns.  MarketCycle always holds a minimum of 25% momentum stocks in our portfolios.  (Chart courtesy of Alpha Architect.):

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That’s it… thanks for reading!

MarketCycle Wealth Management is in the business of managing your money through the market cycles.  There is a contact tab on our website, but I can be reached via:

StephenAust@MarketCycleWealthManagement.com

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MARKET CYCLE  — DUAL MOMENTUM  — TREND FOLLOWING  —  RELATIVE STRENGTH  — HEDGE FUNDS

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In my first incarnation, when I was in practice and steadily seeing patients, I would do an exam and then give a report of my findings, attempting to make sense out of the presenting chaos & confusion, backing up everything that I reported with proof.  It was the “proof” that allowed patients to understand that I knew what I was doing and to trust me.  And it is proof that I am constantly searching for as I attempt to make sense out of the current market chaos & confusion.

[There is a PDF & print function at the bottom of this blog, on the website.]

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The stock market hates one thing and one thing only:  chaos & confusion

For better or worse, we suddenly live in a world of chaos & confusion, all created by the daily changing whims of one man that wants to ‘dictate’ even the tiniest detail.

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This first chart shows the global level of economic chaos & confusion.  (Chart courtesy of the conservative Bloomberg Economic Research)

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This next chart below comes from the highly respected conservative publication, The Economist.  This is the #1 publication used by hedge funds in their decision making.  The chart shows President Trump’s approval rating on the economy.  I have gone for the past two decades without being the least bit political in my writings, but now politics is the thing that I have to deal with on a daily basis.  My first thought upon awakening each morning is:  “What bad thing happened while I was sleeping?”

The first three months; Trump’s approval rating on the economy.  (Chart via The Economist):

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Let’s first look at what the market environment would be like if things were normal.

Earnings are good.  Jobs are good.  Taxes are low.  The Fed wants to be accommodative.  Inflation is low (although now rising again because of tariffs).  Margin has not been called in and margin is still being used at surprisingly low levels.  Markets are very oversold on a daily and weekly basis.  New lows on the NYA are now bullish.  The VIX is now giving a bullish signal.  MarketCycle’s proprietary “short-term-buy” indicators have now triggered “bullish.”  We are still in a secular bull market and despite the recent hit (explained below) the United States is still the powerhouse of the globe.

We were due for a stock market pullback because of overbought conditions and we got that right on cue in February and early March of this year.  The (S&P-500) stock market was correcting and then bottoming perfectly at 5500, and the pullback was over and done with.

But then:  Donald Trump spoke in early April… and the world came unglued and it fell apart. 

Surprisingly, 90% of Trump voters do not have brokerage accounts, so they have not yet been hurt by Trump’s actions.  Only 10% have brokerage accounts, although they are giant portfolios, and these people have easy access to him, even if they have to buy it.

Immediately after “Liberation Day,” the market began to fall.  A better name may be “Obliteration Day” because $10-Trillion was wiped out in the global stock market in just 2 days.  This is what $10-Trillion looks like:  $10,000,000,000,000.  That’s a lot of digits.  Almost nobody imagined the ridiculously high level of tariffs that would be rolled out… IE, 47% on Vietnam.  This massive two-day drop was caused by fear, but also because the entire world, which mostly owns U.S. stocks, immediately SOLD all of their U.S. assets, bonds and stocks and currencies… and they moved everything back home.

Trump’s tariffs = U.S. down and everyone else up.  It is like telling everyone to take their money out of the U.S. and to just leave.  The entire planet is angry at the entire United States.  A friend that recently flew to the U.S. from Europe, on a normally crowded airplane, was the only person on the plane.  Nobody wants to come here.  Visitors are now being stopped and even detained at the airport.

U.S. exceptionalism in the markets ended in an instant, with one proclamation.  Nobody wanted to own our stocks, so they fell sharply.  Nobody wanted our bonds (which means that nobody wanted to loan us money) so they fell sharply.  Nobody wanted to hold the U.S. Dollar, so it fell sharply.  Normally if bonds go down then the Dollar goes up, but not this time because both fell in unison.  This is a unique and temporary phenomenon, it won’t last, but it was strong initially and it indicates that nobody on the planet currently wants to deal with this new and profound chaos & confusion.

So, after “Liberation Day,” U.S. markets went down and almost crashed… but Trump flinched, as I knew he would, and he backed off of his doomsday plan.  He has now seen that breaking things simply for the sake of breaking things is often a mistake.  My wish is that he will somehow remember that he almost crashed the markets.  He seems to anchor to certain beliefs and then he tries desperately to confirm his beliefs rather than challenging them.  That is a big mistake and we are the ones that would have to pay the price.  We’ll literally pay the price because Trump’s tariffs and Trump’s need to force lower interest rates would result in sky high prices for every single thing that we all ‘consume.’  If implemented, these high tariffs would literally be the biggest tax hike in history and it would be placed almost entirely on the shoulders of hard-working Americans, rather than on the rich.  Tariffs are a regressive tax.

But somehow I hold the opinion that Trump will back off even further and we’ll all be saved from obliteration.  He’ll find some way to “save face” by saying that he “won” and that he got “great things never seen before” out of his “art of the deal.”  And then he’ll take credit for the stock market jumping higher again.  If he backs off and only sets tariffs at a general 10% level, and if he doesn’t find a way to fire Jerome Powell from heading the Federal Reserve, then the stock market may immediately leap higher and investors will have to be already invested in the markets in order to receive that profit.

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So, back to the real world, minus any crazy stuff coming out of the White House.

In the short term, the S&P-500, as a proxy for the markets in general, is attempting to bottom and then move higher.  It just needs to get above the dashed green lines on this chart to suggest that the bull market has resumed. 

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The S&P-500 might still want to retest the 4800-ish area once more.  A retest wouldn’t be the end of the world since approximately 50% of all corrections normally include a retest.  Again, a “retest” means that the correction low is (approximately) hit twice, in a “W” shape, rather than the bottom being “V” shaped.  If a retest occurs, then the Fed might lower interest rates at their (Wednesday) May 7th meeting in two weeks, especially with inflation decreasing in the latest CPI & PPI reports, and this could have the effect of rocketing markets higher again.  If there is no attempted retest of 4800, then the Fed would have no reason to lower interest rates in May and they would likely wait until June.

Worst case scenario, if we get a “Trump Tariff Recession,” and I do not currently expect to see this, then the S&P-500 might want to very temporarily move down to 4500 before then rapidly moving higher.  This also wouldn’t be the end of the world and we would still have a chance to recover back toward 6000 by the end of this year, especially with the Federal Reserve then actively and aggressively lowering interest rates, which is very stimulative for the economy.

We are getting much closer to the end of this market correction.  We are in a normal correction that happens once every couple of years, but still within the confines of a SECULAR BULL MARKET THAT LIKELY WON’T END FOR ANOTHER 3.5 YEARS.

The market could go higher from here, or it could retest the April lows before then going higher.  The market is down today as I post this blog (faintly yellow vertical highlighted line to right) because Trump spent the Easter weekend droning on and on about trying to find a way to fire Fed Chairman Jerome Powell, which he legally cannot do even though he is the one that originally put Powell in as Fed Chairman.  Actually, Trump is setting up the sales-pitch that any further downside will be caused by Powell’s reluctance to lower interest rates (in the face of low but now increasing inflation).

Note, there is a chance that the S&P-500 holds at the 5100 level.

Short term technical analysis… chart posted at 10:30 AM EST on April 21st, 2025:

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That big two day drop shown above (and red dot, far right below) when viewed through the lens of history, reveals that a big downward drop like we recently experienced has always led to giant bull market gains.  (Chart courtesy of Bespoke)

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And the (S&P-500) pullback to 4800 touched the exact bottom of the intermediate term (arithmetic) bullish trend channel before bouncing higher again.  (I originally drew this red dashed line back in 2022 which was 2.5 years ago.)

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And we remain well within the boundaries of the secular trend channel, which is very bullish longer term.  I still believe that we will follow the purple dashed line higher…  and I still expect this bull market to go to astronomical levels before it ultimately ends in a debt-fueled inflationary crash several years from now.  My goal is to make any crash highly profitable for MarketCycle’s clients.  We made a fortune during the giant bear markets of 2000 and again in 2008.  Crashes can be much more profitable than bull markets.

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Regardless, in the very long term, and despite any bear markets and crashes, stocks go up and up and up and up.  Over the very long term, owning stocks is a no-lose proposition.  The dark blue line shows the past 200-year profit line for anyone owning the U.S. stock market.

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Currently, investor sentiment is so fearful that it is now extremely bullish.  Extreme fear indicates that everyone has already sold and only buyers are left.  (Chart courtesy of Bloomberg Research)

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The stock market (blue line) will eventually follow the bullish “smart investors” (green line) who are now actively buying stocks.  (Chart courtesy of Jim Paulsen)

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It is highly unusual that interest rates (green line) would move higher while the USDollar (blue line) is falling.  This indicates that foreigners are already tired of Trump’s chaos & confusion and they are taking their money and going home.  (Chart courtesy of Standard Chartered Research)

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Foreign ownership of U.S. bonds and stocks has plummeted and the U.S. was temporarily damaged by this.  (Chart courtesy of DataStream)

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The money that has been removed from the United States has moved to other countries.  MarketCycle also moved some U.S. funds in client accounts to other developed market countries and held in the Euro.  (Chart courtesy of Goldman Sachs)

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And a lot of money has moved into gold.  MarketCycle’s highest allocated individual asset has been gold for several years now.  Most advisories and institutions and hedge funds do not hold gold, and I don’t understand why.  I made a 1000% gain via 2x gold from 2001 to 2011 before selling and waiting for the next gold bull market which MarketCycle caught with perfect execution.  In my opinion, gold will reach incredibly high levels by the late 2030’s… I mean REALLY high levels.  MarketCycle’s client accounts own actual gold bullion safely held in the vaults of the Royal Canadian Mint, where we get tremendous tax savings if we ever sell and we can take physical possession of the gold during an emergency.

Central Banks, such as the Federal Reserve, must know something because they are hoarding physical gold at an almost parabolic pace. (Chart courtesy of Yardeni Research)

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SUMMARY:  MarketCycle is still bullish.  The market has likely bottomed, barring any incredibly dumb proclamations by our leader.  Most of us have grown tired of the chaos & confusion, but the market is becoming numb to the noise and the market will soon ignore it and move higher, likely at the same time that Trump also grows tired of all of this.  

Strength is being found in smaller utilities and momentum consumer staples; both are defensive sectors and are mostly non-tariff.  Healthcare stocks are showing some strength, but not as much as the Wall Street hype would suggest.  Crypto is showing renewed strength and it broke above overhead resistance just this morning.  Private credit is still strong.  Big bank stocks are not affected by tariffs and they are showing strong relative strength.  Small and mid-cap innovative technology is showing renewed strength and they are less affected by tariffs.  Big tech is not yet showing outsized strength, but when they do, they are likely to really pop higher.  Gold just keeps getting stronger and it is way up today.  As mentioned above, developed market stocks now are showing strength and going forward, investment accounts may want to hold as much as 15% in developed market stocks held in Euros (EUR), particularly in a developed-market-growth ETF.  United States stocks will still rule supreme over the longer term, regardless of what I wrote above.  We have to remember that getting above the two green dashed lines on the short-term chart (above) is of the utmost importance for the continuation of the bull market.

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So, the Report of Findings:  The patient has a minor injury that will “self-heal.”

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“You will remember these troubles as no more than waters that have flowed by during the night.”    Job 11:16

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Thanks for reading!

MarketCycle is in the business of managing your investment account.  We try hard to earn our keep.  The process is easy.  There is a contact tab at the top of our website; it costs nothing to talk.

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MARKET CYCLE  —  TREND FOLLOWING  —  RELATIVE STRENGTH  —  HEDGE FUNDS  —  

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It’s a brave new world and I’ve been fiddling around with using artificial intelligence programs.  When ChatGPT, the popular artificial intelligence, was asked to explain what a market correction is… this is the answer that it gave (but I had to fix its grammar):

MARKET CORRECTIONS PREVENT MARKET BUBBLES

• When stock prices rise too quickly, they can become detached from fundamentals (earnings, revenue, economic conditions).
• Corrections help to deflate excessive speculation before it turns into a full-blown bubble and subsequent crash.

THEY SHAKE OUT WEAK HANDS

• Corrections often drive out short-term speculators who may have entered the market for quick gains.
• This allows long-term investors to buy quality stocks at better prices.

THEY PROVIDE BUYING OPPORTUNITIES

• Many investors view corrections as a chance to buy fundamentally strong stocks at a discount.
• For long-term investors, buying during downturns can improve portfolio returns over time.

THEY HELP RESTORE MARKET BALANCE

• Stock prices can become overextended due to investor optimism or momentum-driven trading.
• Corrections help reset valuations closer to fair value.

THEY ARE A NATURAL PART OF MARKET CYCLES

• Historically, the stock market experiences a correction of 10-19% roughly once every 12-18 months.
• While they may feel unsettling, they are expected; corrections do not necessarily indicate a prolonged bear market.
• Corrections play a crucial role in maintaining a healthy, functioning market.

THEY REINFORCE INVESTMENT DISCIPLINE

• Investors who stay disciplined during corrections (rather than panic selling) often see long-term gains.
• Corrections serve as a reminder to maintain a diversified portfolio and to stick to a well thought out plan.
• Long-term investors who stay focused on fundamentals, rather than short-term price movements, are usually rewarded over time.

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I’d like to personally thank ChatGPT for that since s/he somehow seems to be alive.  And I’d like to close with this chart that shows the pullback frequency that we should learn to expect throughout our entire investing life… and yet the stock market still has a distinct & strong upward bias. (Chart courtesy of NDR Research):

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How does the stock market respond AFTER the correction bottom?  This final chart shows the historical percent of profits 3, 6 and 12 months after the correction bottom; complete recovery of all losses within two months (or less) and then ongoing profit gains over the next 10+ months.  (Chart courtesy of LPL Research):

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That’s it… thanks for reading!  Sorry, but no correction details this month as we are reserving this information for clients only via our regularly emailed MarketCycle Updates.

MarketCycle manages investor’s portfolios.  The process is easy and affordable.  There is a contact tab at the top of our website.

Our paid subscriber service, The REPORT, can be reached via the link on this website.

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MARKET CYCLE  —  HEDGE FUND  —  TREND FOLLOWING  —  RELATIVE STRENGTH  —  INVESTMENT MANAGEMENT