Tuesday, March 21, 2006

If Things are so bleak why is the market hitting new highs??

This is a question that I as a bear (becoming more perma-bear like every day) get asked frequently. Every night CNBC, Fox, CBS, CNN, etc point out that despite the fact despite all the gloom and doom in the air, the "Markets are Hitting New 5-year Highs". Let's go to the video tape. The true market bottoms were October 2002 and then nearly again in March 2003. The vast majority of the "bull market" occurred during the post-invasion Wall St party that lasted from April 2003 to March 2004. Over the past 5 years returns for all of the major indexes have barely not reached 5%/yr.

Much of the true bull market gains have been sector specific (energy) or small-cap. The majority of individual portfolios have seen little upside in this "5 year bull market".

With that said, I think the tide is finally turning and the markets could enter a period of weakness from April to October 2006. I'm principally an options trader utilizing my fundamental market/stock specific knowledge. I'll be looking at NASDAQ puts in the next couple of weeks.

Sorry for the long lay-off. I was playing Dad 24/7 for the past couple of weeks while Mom was in NYC.

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