Mark Hulbert writes:
Stock market bulls lost an important ally on Wednesday: Dan Sullivan is now convinced that we are in a major bear market.
Sullivan is editor of two newsletters, The Chartist and The Chartist Mutual Fund Letter. Sullivan has been publishing the first of these since the late 1960s, nearly 40 years ago. Very few others have been continuously editing an advisory newsletter for any where close to that long a period.
Sullivan, therefore, has seen lots of different kinds of market environments, which is why we should place more than the usual weight on what his intuition tells him. And right now, as he said in an interview Thursday afternoon, his "gut feeling" is that we're in a bear market that we will need to let "run its course."
As a result, Sullivan has liquidated his two model stock portfolios and gone completely to cash. The last time he was in an all-cash position was in early April 2003, nearly five years ago.
April 2003 was the perfect time to buy after the dot com bear market. It was almost exactly the wrong time to go to all cash. See this chart.
From the April 2003 low to last October's high, the Dow gained 76%.