Wednesday, May 27, 2009

For GT Blog May 27, 2009

The great advance in most of the major world bourses from the early March 2009 lows has now generated much opinion and controversy as to the structure of the advance

Is this the beginning of a new bull market or – just another bear market rally?

The bears sitting on the sidelines are praying for a correction – even a retest of the March lows so they can finally get invested. One money manager sitting in cash has gone public with the following table setting out modern bear market rallies in the S&P500 since 1960

The average gain was 17.66% and the average bull skew in weeks was 5.8 weeks – compare those numbers to the current advance - now gaining 30+% and into week 12 which in terms of magnitude and time are both double the average modern bear rally – We conclude the current advance is not a bear rally – and that’s no bull

The April – May 2001 bear market rally

1 comment:

canuck2004 said...

What I was thinking was along the same line... but I'm beginning to be more and more convinced that the TSX has started a new bull market, while the S&P 500 may just trade sideways in a listless fashion.

The TSX has a beautiful bullish chart, charging up on strength into a "Golden Cross" in progress. The S&P will get there, but in a much weaker way as the descending 200 DMA will eventually fall to meet the market... not a very convincing bullish signal.

In other words, it seems that for the TSX, this is the real thing, and investors should avoid US stocks for next several years.

With China looking to be the next great economic powerhouse, at the USA’s expense, they will need more and more commodities, and Canada will be a big provider. The TSX can’t help but outperform.

I can a see a long term disconnect between the TSX and S&P 500.

I have to say, I'm getting fairly excited here for Canadian investors