Stocks Will Go Higher Over Next 12 Months
This is going to be a hard road. The market has been relative sanguine but Thursday’s -6% drop is a stark reminder that volatility is alive and well. Those risk adverse dampen these powerful market moves by diversifying into different asset classes: bonds, international stocks, even holding cash as a governor.
As uncertain as our current environment is, if you take the vitals of the market: breadth of the advance, patterns of previous drops, market volume on the big moves, etc., the market looks strong. History never repeats but it rhymes. For what it is worth, and we’ve found it is worth a surprising amount, the market internals, or technical indicators, portray a market that is moving higher over the next twelve months.
We will, no doubt, see heavy market movements, but the unprecedented government stimulus, belief in human ingenuity and world awash in cash have allowed the Bulls to win the recent market. You would have to knock down one of those pillars to topple this Bull, which may prove hard to do. We will be watching very closely.