Tuesday, October 2, 2007
Final bull legs
I've posted this before but it's probably worth repeating. Final legs up in bull markets average 34% trough to peak in roughly 6 months. I've also noted that once the public starts to pile into an asset you can look for a parabolic move that lasts roughly 1 to 1 1/2 years. The Nasdaq bubble fit that criteria pretty closely. It lasted almost 1 1/2 years exactly. The real estate boom also lasted about a year and a half once the public caught on to a "sure thing". Notwithstanding last weeks COT, which may have been an aberration, the commercials are and have been at historic long positions. If we are entering this kind of period and you start hearing your neighbor and coworkers brag about how much they are making in the market keep in mind that at this stage of the game this is not a contrary signal. Far from it this means it is the time to be greedy as hell for about a year. Once that year is done then get rid of that greed at all costs and get the hell out.