How Much Longer Till the Next Bull?

While optimism seems to have returned, albeit reluctantly, to the markets, there is no telling whether it will stick around.

The question that many are asking us, is at what point are we going to be in a new bull market? Technically, the answer is simple – based on the March 9 close of the S&P 500 at 676.53, we’ll need to hit 811.81. A “technical” bull is a 20% increase from a market low.

Looking at Wednesday’s open price, that’s another 35.8 points, or 4.6%. So we’re right around the corner. A big day like the March 10 could move us well past the technical bull mark.

But what does it mean? Not much I’m afraid. Ultimately the markets are forward pricing mechanisms, and they are ruled by the collective emotion of the participants.

A new bull could be the psychological lift that they need to start charging ahead. But they could just as easily send it right “back to the stables” like they did to the baby bull in November and December. Only time will tell. But that doesn’t mean you can’t start preparing for it.

For example, rumor has it that IBM is looking to buy Sun Microsystems (Nasdaq: JAVA). It would create one of the largest server behemoths in the world with over 65% of the market. It would also give International Business Machines (NYSE: IBM) an extra boost in reclaiming the mainframe industry.

Bank of America (NYSE: BAC) announced it could start returning TARP funds this year. Their CEO indicated they could be profitable as well. A far cry from the “blood in the streets,” the world is going to die, mood that Wall Street suggests.

And just last week we saw Merck (NYSE: MRK) making a play for Schering-Plough (NYSE: SGP). In an era of tight credit markets and reduced outlooks, we are seeing a resurgence of mega-deals that indicate things are better than we believe.

It’s why we might not have long to wait for our newest bull.

Comments

[Tom Armistead:]

We are seeing a surge in mega-deals that confirms that anti-trust is dead. The only way to create value in this economy, it seems, is to create monopolies.

Mar 19 08:50 AM

[Larry House:]

You can create any picture you want when you cherry pick your facts. Just put your money where your mouth is and see how it turns out.

Mar 19 10:23 AM

[PROXIMO:]

This article reminds me of a celebrated jury trial several years ago, where the jurors ignored a mountain of evidence and refused to deliberate.

Mar 19 03:08 PM

[Alex Filonov:]

I'd agree, if not for Fed's decision yesterday.

Mar 19 07:38 PM