Ralph is a pioneer in the development of market analytics and has a global reputation as a market historian and a technical analyst. He is a published author, popular lecturer and a leading international expert, consulted by prominent financial experts and journalists worldwide.
Do you think the market is merely consolidating or do you see a top forming?
"Classically, at market tops, price is very volatile. At market bottoms, price is very climactic... very recently we've seen the small and mid-cap stocks come on strong and they are within less than a half of one percent from making new all-time highs—that's impressive. In fact, in the last few weeks the Dow and the S&P have done well. Now, there's one standout that has not performed, and it hasn't performed since December of last year, and that's the Dow Jones Transportation Index. So far this year you've had, in the parlance of Dow Theory, a negative divergence or a negative non-confirmation as they officially call it, which means you're in a corrective phase..."
Are you concerned about further weakness?
"There's still concern. In fact, there's what I call the stealth correction because you're not seeing it. I think anyone listening, if you're an active participant in the stock market, you really have to be sector and stock specific. It isn't homogeneous—everything is going up at the same time. And this is a phenomena that's been going on for the last several months. I'm not saying it's going to turn into a disaster any time soon but sometime in the latter part of this year we're probably going to get a rate hike and I look at the chart of the dollar and that looks like it's consolidating on its way to a new high. So, there are factors out there that could weigh heavily on the equity market."
What about over the long-term? Do you think stocks are still a good place to be?
"If you're in the camp I'm in and you're looking at this market on a secular basis—10, 15, 20 years—odds are that rates are going to be working their way higher over the next couple of decades; and the last asset you want to be heavily in, or in at all, is bonds. Because as interest rates go up, bonds go down. So over the long-run it behooves all of us to look at equities."
What about those who say we are near the end of the bull market in stocks?
"The last secular bull we had was an 18-year run between August of '82 to January-February of 2000—that was the last one. We had a crash, by the way, five years into that. And it's not a straight run up and there's a lot of rotation. So I think we're in a secular bull that has at least another 10 years left. So, if you believe that and you're in that camp, it will end with excessive public speculation like we had in the late '90s with the dot-com bull. You and I lived through that. It was an unbelievable time. They had four or five hundred times no earnings. It was amazing! Are we anywhere near that? Heck no. Can we have a bear market? Sure we could. We could have a 15, 20, 25% decline anytime. But that doesn't mean it ends the secular bull."
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