Get Ready For the Next Bull Market
After flashing bullish signs for several weeks, the overall market now appears ready for a more sustainable rally that could surprise the majority. Here are the signs to watch out for to confirm that stocks have begun a new intermediate term uptrend.
Thursday's late-day reversal in stock prices was spurred primarily by nervous short covering as rumors spread over a new Euro debt deal. Stocks are sharply higher in early trading Friday in reaction to the overnight agreement to provide capitalization directly to the banks.
A solidly higher close Friday, the last trading day of the month and quarter, will further improve the technical outlook. At the early June lows, there were signs that fewer sellers were pushing prices lower. Over the past several weeks, the market's ability to rebound repeatedly from early selling was also a sign of strength.
The bullish signs from the market internals in early June shifted my focus to the long side of the market and the Advance/Decline lines are now closer to giving strong intermediate-term buy signals. This could mean a dramatic stock rally that could last until the end of the year, which is a pattern we have seen in past election-year markets.
The technical action helped me to wonder on June 8, "Is A Buying Opportunity Around the Corner?" There have been some good opportunities to buy stocks as well as ETFs on the pullbacks over the past few weeks, but once the intermediate-term buy signals are confirmed there will still be plenty of time to buy