Second Leg—Longest And Strongest
We think the first “leg” of this secular bull market began on October 10, 2008 when 92.6 percent of all stocks traded made new annual lows. Sure, the major averages went lower into the March 2009 lows because the Financials kept going lower, but the majority of stocks bottomed in October 2008. We believe the second “leg” began in February 2016 and it should be the longest and strongest.
Third Leg—Speculative Leg
When the second “leg” ends is unknowable, but when it does the stock market should go into an upside consolidation just like it did between May 2015 and February 2016. Subsequently, it should break out to the upside and begin the third “leg,” or speculative “leg.” For the record, in the 1982 to 2000 secular bull market, the third “leg” began in late 1994 and lasted into the spring of 2000.
