As of July 7, 2006, is the US in a bear market?

Question

US Stocks - are they headed higher or lower? Tell me where you think the Dow Jones Industrial Average will be at the end of the year - presently at 11,090.

Answer 1

We are in a 'sideways' market...for alot of reasons. Unless you are a gold star stock picker, I suggest you get into some short term C D's at 5+% and wait for better investing news.

Answer 2

The first part of your question
The technical definition of a Bear market is for a decline in several indexes of 15%-20%. That has not occurred in the past several years. But others will argue that the failure of the Dow in May within 100 pts of all-time highs puts us right back into the Bear Market that began Jan 2000. Unless the Dow can clear 11,721 by several percent, the bear is still in control. It will all be figured out in hindsight, but useless information at present.

The second part of your question
Yes, stocks are headed higher, and Yes, they are headed lower. That is what the stock market does -- it has a mind of its own and goes where it wants.

And Yes, everyone wants "The Answer." You seem to have no idea how silly and useless "The Answer" will be when you get it, much like your question.

You must know that the future is uncertain. Many traders react to uncertainty by hoping it would just go away. They fruitlessly try to deny the implications of change. But change is commonplace in trading, and it's vital that you accept change and think of creative ways to deal with it. Although we may make projections and apply "targets," we do not make predictions, unless it is used to observe alternatives. The best we can do is evaluate and manage our risk in varying scenerios, increase our odds ever so slightly, and use good money management.

Your success or failure lies within you, not some indicator or hot tip or one answer or one investment. There is no one investment, there is no get rich quick scheme, there is no pot at the end of the rainbow.

Success in trading will be enhanced if one abandons all efforts at prediction and focuses instead on knowing what to do when and if certain prices occur in the market.

If you want my opinion, I think we are approaching Biblical End Times; the chaos is epic and widespread and uncertainty is unimaginable. We all sense the clinging desperation of everyone else.

If you wish, the long-term cycles project (but do not "predict") a bottom in 2008, and the SuperCycles point to a Super Bottom in 2012.

Between now and then, the market will rally, and it will decline in typical Bear Market fashion, and it will go sideways.

Answer 3

No, not yet. The markets are not in a sustained period of lowering prices, which is the definition of a Bear Market. But...
There are massive problems coming down the pike for us here in the States, economically speaking. Fiscal and monetary policy of the US Government and the Federal Reserve Board have led to a destabilisation of the economy in the US and- by extension- the rest of the world.
Taken one at a time, these problems would not be so severe, but because all these bills are coming due at the same time, the markets are going to have hell to pay.
The US budget deficit is astronomical. Congress is building $100M bridges to an island with fifteen people, who would rather use boats anyway.
The US trade deficit, with China especially, are running to the tune of $286B.
The Fed has printed so much money in the past few years that the world is literally drowining in dollars. Make more money? Sure. Even Chairman Ben Bernanke said once that what we should do to save time is just dump the money from helicopters over the major cities. Too much money makes money cheap- and, in turn, things get more expensive.
Inflation is much, much higher than the 2.5% the government admits to. Been to the grocery store lately?
Real wages have stagnated so people has less "real" money in their pockets, even though inflation has been "low" for so long.
In order to survive, we have taken money from our homes to finance the trip to the grocery store, leaving the typical American with a whopping amount of debt- so much so that the real savings rate has turned negative for the first time since the 1930's, which, as you may recall, is the era of the Great Depression.
Of course, Fannie Mae and Freddie Mac own most of the mortgages in this country. Too bad that accounting scandals and cooked books are going to bring both companies to their knees later on in the summer. If the government doesn't bail them out (see monetary policy above...), then both of the largest mortgage holders in the free world will be bankrupt. Nice, huh? Wait, I am just getting warmed up.
Countries around the world who were all too happy to finance our little party for us by buying US Treasury Bonds have decided that they don't want to play any more and would rather get paid, instead. Now, they are choosing to buy Euros and cashing in their dollars. The value of the US Dollar on the world-wide markets has been sliding for years and will continue to slide to uncomfortable levels. Japanese cars, that Japanese TV- you know, the quality ones- are going to nearly double in price before it is all over.
In short, we owe big bucks to just about everyone in the world (except the French...). So, even though the market is relatively undervalued, it is undervalued under the old paradigm.
Now, there will be a new model- a model based on the severe devaluation of the world's prominent currency. Sure some companies look good at $10, as it is in the current market. But what if I told you that that ten bucks is really only worth five bucks and in order to make the "real" ten bucks, you have to give me twenty! The valuation that is so attractive at a 15 PE is really a thirty PE after all! See what happens to the markets then.

According to everything I have been reading, there will be a major correction in the markets which will meet its bottom on or around 27 November 2006. I think we are looking at a 25-30% loss on the NASDAQ and Dow Industrial Averages. My off-hand, unscientific prediction: Dow 8375 NASDAQ 1570. Then buy like mad when there is blood in the streets.

After that, there is good news, however. Americans are very good at taking their medicine, believe it or not. We will take it and we will come back stronger than ever.
After the outer planets make a second "T" formation relative to earth and after the Solar Eclipse, which will be the bottom of the market, coming into the Lunar Eclipse (this has only happened twice in 30 years: 1987 and 2001...), the market will begin to rebound. We will stand and dust ourselves off and we will get on with making the 21st the Second American Century. Rest asssured, each of us who have faith and believe in this idea will make a boatload of money.
Best of luck to you!

Answer 4

I'm NOT gonna get long winded here : you'd need a huge crystal ball to determine the market in 6 mos.
I'll agree with stock picker(that makes this simple)

Answer 5

Depends on your time frame. Your bear market might not be noticeable on the time frame of my chart.