Will 2016-2018 repeat 2000-2003 or 2007-2009?
Many market players nowadays think 2016 -2017 will repeat 2000-2002 or 2008-2009, two big bear markets. To writer's view, this time may be really different, although this statement is considered by Wall Street the most expensive phrase.
Before I dissect the difference, I would like first to mention their similarities:
a. Like 2000 or 2008, 2016 is presidential election year, and during each of previous bull market, markets have up huge;
b. Indexes' long-term MACDs line downward deadly crossed, regarded by many as a dangerous sign.
But there are 4 hidden substantial difference:
a. Unlike in 2000 or 2008, the yield curve in 2016 is not inverted;
b. Although Indexes' long-term MACDs appear deadly cross, this year Indexes have not given up rising, while 2000 or 2008 Indexes simply surrendered to downside in spiral;
c. Economies looked peaking in 2000 or 2008, with the FED did not hesitate keeping raising interest rates; while in 2016 the FED still accommodates easy monetary policy when the economy is in the early stage of recovery;
d. Leading stocks react well to solid earnings reports, with no sign of climax run as did in 2000 or 2007/8.
In these regards, this time big bear looks like farther away. However, be preparing for 10%+ market correction and cherry-picking.
Gunning Ju
Market analyst
5/4/2016 from New York
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