Right now is what I would call a transition period. The Dow is at a tipping point. It can either break out to new highs via a market catalyst, or it will stoop lower if no catalyst emerges. I think right now people are still scared because of the US government shutdown, but honestly, unless everyone wakes up to the reality that all the debt we've accumulated HAS to blow up one day, stocks are not going to significantly reverse course. What. I mean is, we might see a 20% drop if people get scared enough, but that will only represent a wicked awesome buying opportunity.
I think the most likely scenario is that we are at the beginning of a secular bull market in stocks. I don't see any other reasonable option with all of the money the government has created. If all of that money hits the street, we will be dealing with huge inflation. The fed does not want that at all. But if it hits the stock market in increments via the big banks making big bets, inflation will remain subdued and the economy will continue to muddle through, until banks are no longer scared to lend money. At that point, i believe we will see a major economic explosion followed by a severe crash.
For now, I'm very bullish on stocks.
