We’ve been hearing about an economic bust for so long that it’s only human nature to wonder when the boom is beginning so that we can get back into exchange traded funds (ETFs) and other securities.
President Barack Obama thinks the buying opportunity is now. “What you’re seeing now is profit-and-earning rations are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it,” he said on Tuesday.
But is this true?
The stock markets go through a cycle that historically lasts 17 years, remarks Dr. Steve Sjuggerud for Daily Wealth. So the real question now is whether the fear of the masses has reached an apex, or will it worsen and drag the the markets down a couple more years?
Either way, Sjuggerud thinks we investors are staring at a “historic buying opportunity” and a bull market should start in maybe 5 years’ time.
Looking at the S&P 500, Sjuggerud sees stocks below the moving average line, which shows a bearish inclination. He defines the return of an uptrend when the S&P 500 starts closing above the 45-week moving average, and this would be where the double-digit annual returns start flowing in.
But who knows when the bottom has been hit? It took a whole year to know whether we were in a recession, and it will take awhile before we know the market has hit bottom, too.
For that reason, we instead watch the trendlines using the 200-day moving average. Before diving into stocks and ETFs prematurely, we’ll wait for the trend to appear.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.