5 Reasons to be Bullish
This market seems to come back strong after each small pull back. I believe the reasons for being bullish are:
- Too many bears out there questioning every rally. More bears is good for the bulls because that means more people can turn bullish and go long. This also means that those that are shorting this market willat some point, get squeezed out of their positions, propelling the markets even higher.
- Too many people on the sidelines, watching the action with peeked interest. In fact, there are billions of dollars sitting in short-term bonds, CDs or savings accounts barely beating inflation. These dollars will enter the market sooner or later.
- The S&P has held its 50-day moving average over the last 6 weeks. There are two looming events that I expect will push the market higher or at least into a new range once these events occur. The 50-day line will overcome the 200-day line and the index itself will concur its 200-day moving average.
- The economy, I believe, is improving albeit slightly. Most of the bad news is priced into this market. Effect from the stimulus package from earlier this year will start to take hold by fall.
- Oil prices are rising steadily with oil crossing $65 today, up 85% from earlier this year. Being that oil and energy stocks are 12% of the S&P 500, and the blanket impact that oil tends to have on other commoditiesmeans that with rising oil, oil related stocks will move up as well.
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– Faisal Laljee
Full Disclosure: I am long S&P 500
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