Bull Market Confirmation
And while we know that, at least for now, stocks have stopped going down since Q2.
But have they started going up yet?
Some have.
But really how many?
The answer is not a lot.
We know mathematically that there needs to be an expansion in stocks that are participating to the upside, for this to a bull market.
Forget the wars or elections or fed pivots or blinks.
It's just basic arithmetic.
So how do we define stocks that are going up?
Higher highs, am I right?
Looking at the new 52-week highs list right now probably doesn't make too much sense. Most stocks are no where near new 52-week highs, so there's no point in looking there.
In fact, historically near the beginning of bull markets, the 52-week highs list remains quiet for a while.
Stocks, mathematically, need to make new 3-month highs, and then new 6-month highs before they can ultimately move on to make new 12-month (or 52-week) highs.
So if we know that, then why don't we just focus on the new 3-month highs list (63-day highs)?
While we've certainly seen a collapse in new lows, where is the expansion in new highs?
It's still quiet, but we're looking for an increase in that list to confirm that yes, we are moving in the right direction towards a bull market.
Remember, we don't know that we're in one until after the fact.
So let's just watch the data to determine if, in fact, we should be spending more time looking for stocks to buy, or more time looking for stocks to sell.
So far it's paid well to approach the market like this.
I think this trend continues and we'll keep placing these types of bets until the market proves that it is no longer a good idea.
So what do we need for confirmation that we're in a bull market?
An expansion in stocks hitting new 63-day highs is the next thing I'm waiting for.
What about you?
What's front and center for you and your portfolio?
What does the market need to do to prove to you that we're heading toward, or already in, a new bull market?
- JC