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Looking at Joe Granville's classic market-timing book... There's what I call the "Show-and-Tell" method. The Dow Jones Industrial Average is the ultimate headline number; second to that would be the Standard and Poor 500, so these are "show" numbers and are meant to fool you. Meanwhile, other non-headline indices, such as the MASDAQ or Russell 2000 would be the "tell" number that gives away what is REALLY going on.

For example, right now... The DJIA and S&P 500 are near record highs, but the NASDAQ is far off its life-of-bull-market high. Given the disparity, the "tell" here is that a Bear Market approaches, or at least a significant Correction. Suggest you Bulls take some money off the table!
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After the S&P 500 and NASDAQ Composite clipped the -20% mark that is the minimum for a Bear Market, the DOW exploded some 1,000+ points yesterday, a record point gain. So, is the Bear Market over? Given the high level of volatility, which actually rose during the record gain, I judge "NO!". Remember, the prior record gain was in a similar circumstance during October 2008, the market have slid badly the week before. While that was the start of a rally, it was nothing more than a counter-trend rally in continuing Bear Market. the bottom some 5 months away and much lower. So, while the market is bobbing around like a cork, do not be deceived, we are still in a Bear Market with lower lows worth patiently waiting for.

Sectors known to OUTPERFORM the typical Bear Market: Utilities (Electric, Gas, Water, and Telephone, although the latter are erroneously categorized as Industrials), Consumer Non-Durables, Consumer Staples, given Keansian stimulus Government spending (Defense Contractors and Healthcare, esp. Pharmaceuticals) and Gold, and oftentimes sectors NOT cyclical to the economy (Agriculture and Energy if given a sufficiently low price for Crude Oil). Sectors that typically UNDERPERFORM a Bear Market: Consumer Durables (such as Automobiles), Travel (Airlines, Rental Cars, Hotels and Casinos), Capital Equipment (such as Machine Tools), Freight (such as Trucking), things high on the Maslow Scale (such as Yachts and Powerboat Engines and Jewelers), and most especially high valuation stocks, as a Bear Market is more about valuation than any other single thing.

Remember: "The trend is your friend". In a Bull Market, you can pretty much assume we are still in a Bear Market until clear evidence shows otherwise. And same with a Bear Market. So, for right now, if you're NOT sure where we're at, we are still in a Bear Market.

Good Fortune, and Happy New Year!
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