top of page

The Case For A New Bull Market

Writer: TLivingstonBlogTLivingstonBlog

2022 has been a historically bad year for the stock market, with the S&P 500 having corrected over 20% year to date. Despite all the gloom and doom that currently permeates the media, I am of the belief that the worst is behind us and that the we are on the verge of new bull market. Here's my case for the emergence of a new bull market.


Sentiment

I recently received a text from someone that he is giving up on the stock market since it is "so unreliable" and he instead is going to focus on gambling on college football and forex trading. This is the exact type of comment that usually happen around major market lows, as the casual participant gives up and "throws in the towel." Bearish sentiment began to reach extreme levels this summer and continues to flourish. This is merely part of the stock market psychological cycle that has been going on for centuries and will continue to repeat as long as markets exist.





Seasonality

It is interesting to note that we are also entering a time of year that is usually bullish. Typically, the first part of the mid-term year is weak, while the stronger action comes after the election. While not a perfect science, it is something that I keep in the back of my head while trading. In addition, earning season can often be a catalyst for the market.


Accumulation On The Indexes

Of more importance is the action of the indexes. We saw an undercut of the June low on the S&P 500, which brought some fear into the market and quite possibly also some capitulation. We've seen some nice accumulation start to appear over the last few weeks, which is a good sign of institutional participation. Now, we would also like to see a dearth of distribution. I can see a scenario where the S&P 500 has indeed bottomed but needs some time to back and fill as the final weak hands are flushed out and the market digests any further news.





Another positive sign is the strong action on the Russell 2000, which shows smaller cap stocks are starting to be accumulated.





Leading Stocks

This is the one area I would like to see more participation in. I took a position in VRTX as it broke out after getting stopped out on multiple attempts in the months prior. LLY has also been acting extremely well. Solar stocks like ENPH are starting to show a come back after correcting hard earlier this month. While this is all a good start, I would like to see an expansion of stocks entering the new high list.






Crypto

Finally, we've seen some strong action come into Bitcoin and Ether recently, which both look like that have most likely bottomed. This may also be a subtle sign that there is some appetite for risk entering the market.


While there is a case for the bull side, it is important to remember to take things slowly. The market may chop around for a few months as I highlighted earlier. In addition, there is always the possibility that things change very quickly and the market reverses lower. That's why it is always important to keep risk management as the foundation of your trading. If we are indeed in a new bull market, there will be plenty of opportunities for trading in the coming months.



To learn more about swing trading strategies, stock market trading, and how to trade cryptocurrencies, visit my course page.



Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this post constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this blog or the associated Twitter and Instagram feeds. The stock or stocks presented are not to be considered a recommendation to buy any stock or stocks. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

Comments


Commenting has been turned off.

Statement on Accessibility

We are working to make this website easier to access for people with disabilities, and will follow the Web Content Accessibility Guidelines 2.0. ​ If you need assistance with a particular page or document on our current site, please contact tlivingstonblog@gmail.com to request assistance.

Join My Mailing List

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Crypto CFTC advisories

bottom of page