New Bull Market Or Bear Trap?

September 29, 2006 (FinancialWire) (By Frank Kollar)

The U.S. stock market is flirting with new high for the Dow (DJIA) as well as new multi-year highs for the S&P 500 Index (SPX). Is this for real? Or are traders being set up for a kick in the gut?

The bulls point to an end to Fed rate hikes and possible rate cuts in December. They like lower commodities prices and in fact, gasoline in many locations is now below $2.00 a gallon.

The bears see a potential weakening economy, a split market with the Nasdaq Composite (COMPQ) and technology stocks lagging far behind the big caps (a bearish divergence), and of course the continued tensions in the mid-east which could flame up again at any moment.

What is a trader to do? There is no question about the current trend. Stay with the trend, which is up. But keep your stops tight. The bears have some good points. Until and unless the market reverses however, UP is the way to trade.

Frank Kollar has been timing the financial markets since 1982, with online service since 1996. He is a dedicated trend timer and his strategies exited the markets before the crash in 1987 as well as the bear market in 2000 through 2002. During the 2000-2002 bear market, his bearish positions resulted in gains exceeding 100 percent, all achieved by trading trends.

Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.

Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.

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