Are We There Yet?

Brittany Stone - Jun 09, 2023

The most recent market rally was strong enough to break through the previous resistance level. There is a good chance that a new bull market is upon us.

The market rally has been strong enough to make the 150 day moving average line (purple line) tick higher. Historically that marks the beginning of a bull market. I believe that the stock market is cyclical in nature. To aid me in making investment decisions, I break down the market cycle into four stages.

I have to give credit to Stan Weinstein for formulating this stage approach to market cycles.

The market cycle goes like this:

Stage 1. Aftermath of the bear market. Prices no longer fall, the market is trading sideways around its 150 day moving average.

Stage 2. A new bull market emerges. The best time to make money on the market. Price is trading above its rising 150 day moving average.

Stage 3. End of the bull market. Prices start to stagnate and trade sideway around the 150 day moving average.

Stage 4. Full on bear market. Prices are trending lower below falling below the 150 day moving average.

I have labeled each stage on the chart below going back to 2020. It appears that we just entered a Stage 2. Of course, it will not likely be a straight line increase from here. Expect ups and downs, but the overall trend should be up. One area that remains a concern is the relatively low participation in this rally (notice that green line has been trending lower). Although it has been improving lately. I would be looking for the opportunity to buy on pullbacks.

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Are We There Yet?

Brittany Stone - Jun 09, 2023

The most recent market rally was strong enough to break through the previous resistance level. There is a good chance that a new bull market is upon us.

Igor Manukhov

Peter Kuntyj

Yelena Manukhova

Brittany Stone

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