Market Analysis: The Bull’s Final Run

On August 28, 2015, I expressed that the U.S. stock market had a very important September-October rally ahead. To keep the bull market going, the Dow Jones Industrial Average needed to recapture 17,500, at a minimum. This occurred last week. In my research comments earlier in 2015, I indicated that 17,500 on the Dow would be of high significance (see blog release dated June 12, 2015). Nothing has changed my view. 

Without the aid of the Federal Reserve (i.e., more easing), I currently do not expect the “Bull’s Final Run” to last very long. The last correction ended on August 24, 2015. In analyzing how past bull markets have finished, the final run tends to last less than 6 months. So far, this rally is two months old. With the level of market gains of the past two months, I do not believe my Dow final target of 20,000 will be reached prior to the conclusion of this current six and a half year bull run. Historically, November 15 – January 15 is a good time for further market gains; however, not every year sees these gains. 

17,500 remains a key level for the Dow. If the stock market has a correction at any time over the next few months that causes the Dow to move back below 17,500 for any length of time, this would be of concern. At this point, I am going to lower my final Dow target to 18,400-18,800. If I see reason to change this forecast in the next two months, I will provide an update. If stocks can reach this final target range by the end of this year, or early next year, reducing exposure in stocks should prove to be very prudent. The time is approaching to prepare for a bear market.