E Why I Am Still Bullish

For a guy who fought the bull market for so many years, it seems odd that since the election I have been steadfastly bullish, even when others weren't. November 2016 was a pivotal time on the charts and no, I have no interest in discussing politics. I only look at what the market did back then and still look only at what it does today.

Why was the election so important? Actually, it is not the election but that the technicals were singing. Check out the chart. After a slow erosion in prices and an actual breakdown below support, the market came roaring back.

What were the pundits and celebrities saying back then? The market was about to implode, that's what.

Again, I don’t care about whether they liked the new president or not. It was a market sentiment that cratered as the voting results came pouring in.

We had a false support break, extremely lousy sentiment and a massive overnight reversal to the upside. Something changed in the market.

I felt the same thing happen in 2002 when the tech bubble bear market ended. Note, I am not talking about March 2003, when most people agree the next bull market began.

This next chart shows the market and volume in July 2002. The market slid off a cliff at an accelerating rate, culminating in a massive volume surge (read – panic) and a bullish reversal.

Something was different. Something had changed. And that’s what I felt in November 2016, albeit with a lesser magnitude.

The point? The charts showed us what was going on in the market’s head. And they still can do that today.

Remember the panic we felt Tuesday when the Dow was down 500 points intraday and Italy was supposedly about to leave the European Union? Treasury bonds soared in a flight to safety. So did the yen. And the Swissie crushed the euro.

Curiously, gold did nothing (yeah, yeah, the dollar was strong) but in times of panic, gold rallies no matter what.

And small caps ended the day down just a fraction. A mere 0.2% on the Russell 2000. No signs of stress there. #BTFD

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Disclosure: No positions in anything covered.

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