by Cullen Roche
Long time bear John Hussman isn’t backing down from his belief in a secular bear market. In his latest market update Hussman says he believes the market is in the midst of a topping process that could last many months (Via Hussman Funds):
“The overall market picture continues to have the look of a broad topping process, in which it’s very common to see the market confined to a trading range of about 5-7% for 6-8 months. Still, our investment position isn’t driven by the expectation of an oncoming bear market, and we’ll remain flexible to changes in the ensemble of market conditions. Near-term, tests of widely-recognized “support” are often met by a bout of short-covering, similar to what we observed two weeks ago. Given the moderate improvement in market internals produced by that rally, a retest of those lows that isn’t overly hostile to market internals might provide some latitude for modest market exposure. Suffice it to say that constructive opportunities are likely to be limited, moderate, but not impossible to achieve, and the downside risks below roughly 1280 on the S&P 500 (about where the popular 200-day moving average is running these days) could be fairly violent if internals weaken again.”
I personally still think that investors utilizing a long-term approach during this cycle are likely to achieve disappointing results. If Japan is any guide and the balance sheet recession persists (as I believe it will) the market is likely to remain very volatile. This remains a traders market.
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