Wall Street’s New Bull Market: 7 Signs the Bear is Dead… by Louis Basenese, Advisory Panelist
Senior Analyst, The Oxford Club
Believe it or not, but based on the classic Wall Street definitions, we’re in a new bull market. As of last Friday, all three major market indices recovered more than 20% from their March 9 lows.
Of course, we’ve been here before. Or as Yogi Berra liked to say, “It’s like déjà vu all over again.”
Recall, back in November of 2008 the markets began an impressive run-up, hitting the 20% milestone, too. Then all hell broke loose.
As a result, not every market observer, myself included, is completely convinced by the recent move. But I will say this - seven notable differences exist between then and now, leading me to believe this very well could be the start of a new bull market.
- There’s hope for housing.
On Tuesday CNBC did a feature story on home sales in foreclosure central - California. In one suburb outside Stockton, where one out of every 67 homeowners received a foreclosure notice last month, new home inventories miraculously plummeted from 130 to just 17. One builder went from four sales in five months to nine sales in one month. Tax incentives definitely played a rule. Nevertheless, the trend jives with the latest overall market data.
Recall, new homes sales jumped an unexpected 4.7% in February. It also lends credence to newsletter guru Dennis Gartman’s latest prognostication that “we’re going to have a shortage of housing in the not too distant future.”
Another positive - lumber prices, a leading indicator for the housing market, rebounded roughly 30% in the last three weeks. (The housing market accounts for two thirds of lumber consumption.) Add it all up, and this data is hardly overwhelming. But it’s certainly less bad (see # 3 below to understand why).
- Takeover rumors are moving stocks again.
In a clear sign of optimism and normalcy, takeover rumors are once again returning to the market. And, more importantly, they’re moving stocks and spurning heavy call options buying.
