This stems from our simple, but effective, notion that in a bull market there are only three positions one can and should have: Aggressively long; modestly long or neutral. But this is no longer a bull market. This is now a fully-fledged bear market and we do not say that readily, nor lightly. Nonetheless, given that our International Index made its high late last May at 11,186 and is now 1,888 points or 16.9% below that level and has been down for just over seven months, it is time to face this harsh reality.
This is a bear market. Trend lines that have held in the past are failing. Lower lows and lower highs are more and more common. Fewer and fewer stocks are trading within 2-5% of their highs and more are trading 15-20% below those highs and the Advance/Decline lines here and abroad are collectively weak and weakening.
We are for the first time in years suggesting, indeed, we are stating it rather clearly… our belief that the global bull market that began in the spring of ’09 ended, in retrospect, in the very first days of summer of last year. We shall, henceforth, look to err bearishly of equities, holding long positions in some equities, but erring on balance to the short side of the global equity market.