The following is a summary of our recent interview with well-known market technician Ralph Acampora, which can be accessed on our site here or on iTunes here.
After a short, overnight breakup last November, the US stock market has now rebounded with Donald Trump.
“I’d say Donald has another month or so,” Ralph Acampora recently told Financial Sense Newshour. “I’ll give him 2 more months. And maybe this honeymoon will be a little long in the tooth.”
As the market has been accelerating here, it’s possible we’re starting to get ahead of ourselves, Acampora added.
“If we accelerate, as we’re doing right now … we get into nosebleed territory,” Acampora said. “Because the charts are starting to spike up … and I get a little nervous with that. … We could get a blow-off right here. Call it the Trump Blow-off.”
Any kind of rate hike, which appears increasingly likely in March, could be the catalyst for a correction, Acampora stated.
Despite these potential short-term problems with markets being overextended and extreme sentiment materializing, Acampora sees a secular bull market with room to run.
“If we look across the valley, what Trump is proposing bodes very well longer term,” he said.
Though in the near-term, rising rates may be the catalyst for a sell-off, in the long-term they help banks, as the steeper yield curve allows Financials to make the difference in the spread.
“What we’re planting are the seeds for a very long-term positive recovery,” Acampora said.
Also, as interest rates go up over the next 10 to 15 years, investors who are long bonds are going to shift to the stock market. That public money is going to come back into equities and help fuel the secular bull.
Over the course of his 50-year career on Wall Street, Acampora has seen two cyclical bull markets, he stated. The first began in August 1982 and lasted 18 years. It peaked in January 2000.
From the bottom in March of 2009, which he considers the generational low, we witnessed the beginning of the new secular bull market.
For aggressive, smart and disciplined investors who set tight stops, he suggested they can participate in this market. For more conservative investors, he recommends only nibbling for now, as a possible pullback is close.
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