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Is a New Bull Market Emerging? All Signs Point to Yes
Pessimism remains high, but money flows into stocks are insane.
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Now, for the good stuff…
Pessimism remains high, and “economists” continue to predict a “recession”.
At first, the recession was supposed to happen this year. Now, they’re forecasting it for next year. These same economists (who probably own mutual funds) probably predicted 8 out of the last 7 recessions. Yes, you read that right.
Long story short. Don’t listen to them.
Remember, the Dow averages 49.5% from the mid-term year low (2022) to the next year’s high (2023). So you want to be looking to buy, as the market is already up big (~20%) since the October, 2022 lows.
While the mood is still grim, money flows into stocks are insane, which is extra bullish as the S&P 500 approaches a resistance zone…
Zooming out, here’s the same chart on the weekly…
A breakout above the resistance zone will see short sellers cover (i.e., buy). This will fuel a rally higher.
In the chart above, note that money flows have increased even while prices are down. That’s called a “bullish divergence”… stocks diverge from money flow. One goes down, the other goes up.
This is extremely bullish, because money flow (especially Chaikin Money Flow) tracks institutional dollars. What this means is that institutional investors — pension funds, insurance companies, etc. — have been adding positions before the public really starts buying again.
Because, remember, the public is still pessimistic… so they’re not buying… but the money flows suggest that maybe they should be…
All this means a new bull market is likely emerging, because the herd is always late to the ball game.