All Securities Will Have Bull and Bear Markets
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Market State 1 (Bullish)- The Market, as measured by the S&P 500 has now entered back into a Bullish Market State Environment. This comes after a Transitional Market State 6, which was caused by a spike in volatility (signaling a volatility alert). Since the recent pullback, short-term indicators have now turned back positive, causing volatility indicators to turn positive.
Following the large decline that took place in December, the S&P 500 rallied back to its old high on April 4th (a little more than 3 months) at 2943. Throughout that entire rally, it never had a correction of more than 3%.
The fact that the market rallied back. without a retest of the low or even a meaningful pull back, has never happened before. The bottom line is that Market State 1 is in place for now. It will not necessarily stay in place for an extended period. Market State 1 is in place when almost every new market high occurs. On the other hand, Market State 1 will typically have slightly more risk of a correction because the market is close to a new high. It is important to keep in mind that the S&P 500 declined about 20% and rebounded more than 20% over just a few months. With all that movement, the market will not stay where it is for long.
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