Why do so many investors waste so much time trying to predict the top of this bull market?
 
I think there are two reasons:
 
1. They are psychologically scarred by the 2000 and 2007 bubbles and so they don't trust a market that just keeps chugging to new heights.
 
2. They don't understand classic bull market behavior, especially of the institutional investors who drive the market.
 
We spend a lot of time measuring and dissecting the stock market to figure out what it will do in the next few weeks. But at the same time, I always carry a longer-term macro forecast that is the product of projections about the economy, earnings, and classic bull market behavior.
 
That is why in June of 2013 with the S&P 500 trading just above 1600 for the first time ever I could confidently make the call that we would see the 1800 level that year before a correction to 1400. And in August 2014, before the 2000 mark was reached, I made my forecast that 2250 would come by April. So we were eager buyers in the October correction below 1850, still believing we'd see 2100 before 1700.
 
Other than blind confidence in the economy and earnings, where do such optimistic projections evolve from?
 
In four words, classic bull market behavior. Let me explain why we are not in an equity bubble (yet).
 
What is happening these past couple of years is how bull markets behave when they have some of the best tailwinds like favorable monetary policy and an economy that is steadily improving but not too hot to invert the yield curve. They keep pushing higher, beyond all doubt and nervousness about the rate of ascent and valuations.

Appetite for Growth with a Multi-Year Horizon
 
And one of my best reads on this behavior is my tracking of institutional money movement that continues to buy aggressive growth stocks, especially in Technology and Healthcare.
 
The "whales" that I follow in the Zacks FTM Trader don't focus on the next 3 weeks or even the next 3 months. Many are looking at opportunities on a 3-year basis where some of their picks can double, triple, quadruple and, in select cases, quintuple or better.
 
But they know that have to have staying power to accomplish these kinds of returns. They did their fundamental homework about the company, its industry, and the favorable economic tailwinds that could help the stock along.
 
So they have to place their large bets and let the thesis ride it out, being willing to stomach 20-30% drawdowns that they could not predict, much less maneuver hundreds of thousands, if not millions, of shares through with market timing.
 
Just when you were convinced that "buy and hold" was dead, I urge you to look at stocks that have been targeted by the long-term "accumulation appetite" of the whales. Besides everyone's darling Apple, take a look at Skyworks Solutions (SWKS - Analyst Report), Avago Technologies (AVGO - Analyst Report), Pharmacyclics (PCYC - Analyst Report), Ulta Salon (ULTA - Snapshot Report), and Harman International (HAR - Analyst Report).
 
Now, could it be true that large holders are taking profits in many of these names that have tripled and quadrupled already? Sure. PCYC just got bought for $260, and ULTA and AVGO have had runs that would make any fund manager think about cashing in.
 
But there are dozens more stocks like these that will take the bull market to incredible new heights over the next 5 years.
 
Bull Markets Don't Die of Old Age
 
Just because this bull market is over 2 years older than the average bull has little to do with where it's going or how much longer it will last. What matters are fundamentals like the economy and interest rates. And both right now are very supportive of new highs for this market, this year.
 
No "Bubble & Crash" like 2000 or 2007 is coming. This economy is too stable, the stock market is not wildly overvalued and feverishly speculative, and the interest rate environment is a dream come true. Still.
 
In fact, the current economic expansion at 63 months long is the 6th longest. It will become the 5th longest in June when it eclipses the previous one that began in November 2001 and lasted 72 months. See my chart in the accompanying video.
 
And I believe that this expansion will run over 80 months and become the 4th longest, taking out the current record holder that began in June 1938 sometime in the first quarter of 2016 when the Federal funds target rate will only be about 1%, still very accommodative.
 
When you combine this knowledge with the awareness that "classic bull market behavior" means this cycle will run harder and further than all bears can imagine, you can see why we want to always be looking for opportunities to get good long positions.
 
Big FOMC Week
 
Monetary policy takes center stage again and this will be a very interesting week with several catalysts pushing against each other.
 
First, this is the big quarterly quant-fest with fresh economic projections and a presser from Chair Yellen. Despite the Fed being rationally "data-dependent" this would be a meeting where lots of clarity is to be derived about how the odds look to favor either a June or Sep lift-off.
 
Second, large market players should NOT really be afraid of the FOMC being any less "patient." A June rate hike lift-off vs. a September one means very little in the big picture.
 
The Fed wants to begin the process to "get off zero" for several reasons, including a chance to display these 2 convictions...
 
1. They believe in the economic strength we are seeing.
 
2. They don't want to fall behind the curve, as dove Bullard already thinks they are risking.
 
So any knee-jerk reaction lower on the loss of "patient" will be a chance to buy in my view.
 
Third, the bullish price structure that the market built between S&P 1975 and 2025 in Dec-Jan -- and all above the 200-day MA -- is important and we don't want to see it threatened and fail.
 
If the S&P 500 does begin to "progressively" fail any coming tests -- closes below 2010 and 1990 would worry me short-term -- then large market players are sending us a different message than the one of February where all the headwinds of a higher dollar and lower earnings estimates were blasted right through.
 
The next test of S&P 1980 probably won't hold if the market should break down that much. And that would set up the drop to 1900 I was expecting in January. But it's not all scary. The 300-day MA at SPX 1953 will provide some support and the market would be very oversold at that point anyway.
 
Since you know I'm looking at new highs for this unstoppable secular bull market, you know I'll be buying down there. Be sure to watch the video associated with this article to see all my charts.