3. 2. 1. Blast off!

For the last 43 years, while I've been trying to make some sense of the stock market, and then transfer my discipline into action for those who listen, I've encountered a persistent problem.  When conditions are very bullish, as noted by our main discipline that examines Psychology, Monetary and Valuation, our readers/listeners are always extremely cautious and suspicious of good news, since they are being fed a 24/7 diet of bad news by "experts."  The same, vice versa, occurs at market tops.  It's just the nature of the beast.  Here's where our Asset Allocation Model sits today.

But as each of the composites that make up our Asset Allocation Model are sending us thier most bullish message today as you can see above, is there anything with the current market that is still not quite the way we would like it?

Druther #3: Our peripheral vision is closely watching the progression of our Market Trend Analyzer, which remains in its bullish position, and we would like to see a rally above 1300 on the S&P 500 in the next few months.

Druther #2: We would like to see a stronger bullish signal from our OEX Put/Call indicators.  This is the main Psychology indicator that has not moved into a bullish position.  The very liquid OEX options are used by traditionally smart investors and traders, since they provide the necessary large trading volume to allow their hedging or big trades.  This has not always been a great indicator, but in recent years, it has been very, very good.  Just take a look at the chart of this indicator below.  At this point, if we had our "druthers," we would like to see the bottom strip in the chart below decline down to the 0.80 level. 

Click on the image above to view a larger chart.

Druther #1: We would like to see the price of gold start to move back to more "normal levels."  You can see in the chart below that September 11, 2001, started a big, big reaction in this country.  The rising price of gold has mimicked a rising level of fear as the US has endured one negative event after another.  So today, we are watching for the cycle of fear to break.

Click on the image above to view a larger chart.

As this 13-year neutral stock market comes to an end, we will be on the lookout for the next super cycle bull market in growth to launch.

Don Hays
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