Bull Market Is Showing Signs of Fatigue Says Lowry’s Desmond

Jeff Macke

With all the whining about fiscal cliffs, shrinking earnings and global economic meltdowns, it would be easy to conclude that stocks are heading for an ugly fall immediately, if not sooner. Paul Desmond, president of Lowry Research begs to differ.

A chartist, which is to say one who tunes out the human noise and listens to what the market itself is saying, Desmond likes what he's hearing. "We're basically still in a bull market," Desmond says in the attached video. Sounds pretty good so far but Desmond's view comes with a catch. Nothing lasts forever and this rally is already past its expiration date.

The current bull market started with the panic flush in March of 2009. That puts this run at 46 months; an eternity by market standards. "Typically if you go back over the last 80 years you find that the average bull market lasts about 39 months," he says. "We're starting to see some early signs of fatigue that typically accompany an important market top, but it's still too early to abandon the market at this point."

Desmond's countdown for the end of the bull extends only for the next couple months, suggesting this is no time for traders to get too cute. He's watching for increasing selectivity within individual names. He's starting to see that price action in the Nasdaq (^IXIC) and small caps (^RUT).

Desmond advises staying long stocks but "bullish in a smaller area." It's a time to shift focus from the more aggressive names in the big caps, a space Desmond says is normally the last to be sold off at the end of a rally.

Is the rally already over or is there more room to run to new highs? Let us know in the space below or visit us on Facebook page.

View Comments (80)