The bullish scenario remains intact, here’s why

Timothy J. Truebenbach is the President of True Capital Management and
general partner of True Capital Partners LP, a hedge fund. He uses a
disciplined model that trades on the intermediate-term time frame. For a
free trial to Tim’s Nightly Stock Analysis Report

href=”https://tradingmarkets.comsubscriptions/details.cfm?item=5915&subcat=it”>click here or call 888-484-8220 ext. 1.

If you are new to trading
stocks I have one comment for you that may help you feel good about yourself:
Trading does not get any tougher than what you are seeing right now! 
Thursday’s action saw everything decline and NYSE-related indices face another
distribution day.  These clearly evidence professional selling.  The NASDAQ,
which I believe to be the leading index also declined, but volume tapered off
from yesterday’s levels.

 

As I already mentioned, we
are in a tough market.  There is definitely still strong sentiment against
investing in the market by the public.  And why shouldn’t there be?  The
market ‘bottomed’ in October of 2002, but it has done very little to return
any consistent, reliable profits since then.  We saw a sharp rally through
several months of 2003, but 2004 until April, 2005 has been spent doing a
whole lot of nothing. 

Many of you reading this
column on a regular basis know that I feel the market is headed higher in the
near-term due to a number of historical factors.  The largest impact on
my opinion is the similarity between the Dow from 1929 to 1935 and the current
NASDAQ.  Besides my thoughts, there are a few pros and cons to weigh and
then possibly re-evaluate the market as a place to put any of your capital:

Pros

–        
Strengthening economy
as a result of tax cuts and business incentives

–        
There are not very
many investment options in other assets classes.  For example,  real estate
has boomed in this country and carries added risk and rates have not risen
enough to offer attractive yields.

–        
The historical
precedent I mentioned above

Cons

–        
Rising energy prices

–        
Weak dollar

–        
5 years of the market
doing nothing

–        
Political and global
uncertainty

After reading this basic
list, you may add or subtract things.  In the end, you know where I stand
but it is important to make your own decision.  Bear markets are usually
caused by uncertain economic conditions that the stock market feels will only
get worse.  Bull markets foreshadow improving economics and occur when
least expected.  For the time being, there is still a rally in place
unless we trade below the levels set on 10/13 and we are still seeing good
strength out of leading growth stocks such as Google
(
GOOG |
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PowerRating), Apple
(
AAPL |
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Chicago Mercantile Exchange
(
CME |
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PowerRating) and others. 

Please feel free to send any
comments or questions to me: comments at truecapitalmanagement.com

Tim Truebenbach