The Current Cyclical Bull Market

[pete richardson]

In the accompanying link I argue that we may need the blessed warmth of some good fortune to keep this cyclical bull on track:

http://capmarketline.blogspot.com

[HenryTo]

Pete,

Thanks for sharing your insights. I am also getting increasingly worried about the continuing "stubbornness" of energy and commodity prices (per the CRB Index) to decline - especially since we are now in a declining global liquidity scenario. Perhaps the Fed does need to squeeze a little harder; perhaps not if oil can bounce off its 50 DMA and continue its most recent decent from here:

http://stockcharts.com/gallery/?$WTIC

Ditto with the CRB Index:

http://stockcharts.com/gallery/?$CRB

Right now, I am looking for a resumption of the decline of both oil and the CRB Index post-Memorial Day Weekend - and if this doesn't happen, I will start getting pretty wary about stocks here. Not because of the possibility of an increasing burden in companies' cost structure, but mostly because this will make the Fed more wary and will probably induce them to further cut down on liquidity.

If this happens, then we will start getting more defensive, although some sectors are more of a sell than others. Right now, I believe commodity stocks are in a lose-lose scenario. Why? Because the Fed will continue to clamp down on commodity prices until they suffer a more significant correction. Right now, I am still bullish on large cap growth and big pharma - especially MRK.