Now that it's reached all-time highs, is the market due for a massive correction? Or, is it getting ready to make, instead, a "run for the roses"?
If there’s one trader and market technician you want to listen to, it’s Stan Weinstein. Having decades of experience trading in the markets, Stan is considered “one of the greats” by many in the professional investment community.
Although he turned bearish briefly in November of last year when the major indexes failed to break above their key 50-day moving averages, after spiking off their lows and breaking decisively back above major resistance, Stan has been and continues to be bullish on the markets.
When we spoke to him on Thursday, he said that if the S&P closes above 1600, the Dow above 14900, and the Russell 2000 above 954—which they all did today—that would be positive for the markets and we may see a “run for the roses.”
Although many are calling for a massive correction, he says that investors should expect another controlled correction and use any pullbacks for selective buying.
Overall, he says the long-term picture for the market is “still clearly bullish” and that there’s a tremendous amount of rotation taking place, unlike anything he’s seen in his 50 years of doing business.
One of the major arguments against the bears, he feels, is seen by looking at the NYSE weekly and common stock only advance-decline lines, which are moving to new all-time highs.
Stan says, “If you go through the last 100 years of the market, it’s very very rare—there are exceptions like 1946—but it’s very rare that you can ever see the advance-decline lines making new highs and, boom!, a bear market starts.”
“While anything is possible…we may suddenly start a bear market tomorrow and the bears will be right but, to me, that’s not a good bet. What makes you successful in the market and, I think, in other areas of life is always to make good probability calls. There’s never guarantees. I just want to know that I’m always with a good probability.”
When looking at the global picture, Stan says that his proprietary World Market Index is “making a new bull market high for the move, despite all the negative fundamentals in Europe” and elsewhere. Like the U.S. markets, however, he cautions that you have to be very selective since one area might be doing absolutely terrible while another is breaking out to all-time highs. Overall, though, the broad trend is positive.
Does that mean everything is rosy? No. In fact, his “Glamour Index,” which consists of many aggressive stocks that typically lead the market, made its high in late March of 2012 and has yet to confirm the new highs in the stock market. If it doesn’t start to break out to new highs in the coming week, he says that will serve as an early red flag for a near-term correction.
If you would like to get a free weekly trial of Stan’s Global Trend Alert, which is considered a “Must Read” by Financial Sense Newshour host Jim Puplava, you can do so by calling (800) 868-7857 or by sending an email to stan [at] globaltrendalert.net.
The full audio interview with Stan Weinstein and Jim Puplava can be accessed by CLICKING HERE
