Six Reasons why Trend Followers Know the S&P 500 is in a Secular Bull Market
1) The S&P 500 keeps making new all time record highs. This started happening again 14 months ago, which I pointed out here. Since that time, the market has continued to print hundreds of new all time highs and is, at this very moment, at yet another new all time high.
If any market is printing new record all time highs, that is always a sign that a major bull market is underway.
2) The Dow Jones is breaking out of a 12 year consolidation period, which I pointed out using this 112 year Dow Jones chart .
Generally, if a market consolidates for a decade or two then breaks out, that is a positive development.
3) Foreign markets, for example the German DAX and the EAFA index are hitting new highs. If foreign markets are surging ahead, that is another sign that stocks are in a secular bull market.
4) The perma-bears have been spectacularly wrong. Since the year 2008, I have heard those who have said that the US Dollar would implode, silver would go to $100 an ounce, the worst place to invest your money would be in American stocks, and the best place to take refuge during the imminent and inevitable hyper inflationary collapse would be in gold stocks.
I admit that this all seemed plausible at the time, but the pure price action of the market told a different story.
First of all, for the last two years, American stocks, rather than being the worst place to invest your money, have been the best place and have done much than gold has. In fact, gold entered into a bear market 16 months ago and has not looked back. Finally, instead of being the best place to invest your money, gold stocks have been literally the worst sector for several years now.
If money is fleeing these safe haven assets, as was the case during the beginning of the previous secular bull market in 1981, then that is a positive development for stocks.
5) Leading stocks, such as Google, have led the Nasdaq to new 12 year highs. This is another sign that we are in a major secular bull market.
6) The VIX Index, which measures the level of fear in the market, has been in a major downtrend, despite what you may have been led to believe by watching the news. If the VIX keeps hitting new lows, that's a sign that we are in a major bull market.
