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Bull-Rally

A Bull-Rally is Imminent!

The market rises and fall – dips and twirls – be prepared -- be on the right side of the track!

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bull-rally

Wednesday, December 07, 2011

Not only is the stock market having its roller-coaster ride but many of the major market players are steeped in their own ride on the roller-coaster – switching their investment views on a far too regular basis!

However, it is quite exciting to see so many come in line with my view – that the market is ready to flourish and start its Bull-Rally. This does not mean to say that there will not be the continuous hiccups along the way – which in the option trading arena is a bonus – as earlier stated – that you are on the right side of the trading track at the time! (Check out the contrarian viewpoint in regard to trading on the right side of the track?).

There are several major factors surrounding the view that the bull-rally will materialize. The article ”Reasons to Support a Rally”, give several reasons supporting the bull-rally but obviously the one that has been the bane of all traders, at this moment, is the European debacle!

It appears that if the EU summit, this week, creates confidence that solvency issues on the Eurozone perimeter are being addressed, then brace yourself for a bull-rally in future market trading.

It is important to note that the politicians have merely to create an impression that they're addressing the issue, not that they've formulated a workable plan that everyone agrees to implement now, which, of course, is impossible. Any measure that would ultimately be implemented will have to pass through at least seventeen separate parliaments in order to be ratified.

One of those major market players that has reversed their outlook is David Rosenberg (formerly of Merrill Lynch fame), author of the widely read Breakfast with Dave daily newsletter and chief strategist with Canadian investment wunderkind firm, Gluskin, Sheff (TSE: GS), who has agreed with the above statement and believes “the Dow could spring 2000 points”.

Last week we saw a concerted action by six separate Central Banks and additional easing by the People's Bank of China (among others). What is needed this week, to spur a rally, is for the EU politicians to chime in with a respectably dressed fiscal plan that would appear to deal with the solvency issue. Liquidity has been provided. The confidence is what's yet to materialize.

china inflation



The drop in the major market averages through the summer accounted for all worst case scenarios – including a European recession – and investors have merely been waiting for enough good news to reignite the bull. We have had economic numbers which varied have from 'not bad' to outright strong and corporate earnings, too, have been solid. However, as we are all aware, the market movement is inconsistent and confidence has been shattered in many instances. It appears that excitement will once again be at the fore, with a European recovery in progress, the media will once again become more positive and therefore send the markets upwards – bull-rally imminent!

If we look further behind-the-scenes, it has been inevitable that a fully co-ordinated liquidity operation would become evident. With German Chancellor Angela Merkel and French President Nicolas Sarkozy working within the European Union (EU) to maintain solidity and also encouraging support from Ben Bernanke and the American elected elite, who moved aggressively to ensure enough liquidity was on hand for Europe's latest round of bond auctions.

It quite evident that the Eurozone issue was, indeed, already fully discounted by the market, and if we delve further into our recent market activity, we are certainly staring at a bull market that is already present and will become a fully-fledged bull-rally! So saying – get on the right side of the track – and PROFIT!

bull animation

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