Friday, September 15, 2006
Where possible I try to avoid bull and bear market labels (admittedly they are easy words to use) but we had a good example this morning of why the terms mean very little.
There was chatter on CNBC about the Transports having topped out at 5000, going down to 4000 which is a 20% decline, a bear market but now it has gained almost half of that back.
The peak was in May and then it got close again in July. Clearly the ride down from July 5 to about August 10 was brutal but even if there is a text book definition somewhere that actually says 20% equals a bear market I don't think a bad month is something to be feared. Bad months happen all the time.
The sector is at a point now where we can see all sorts of things converging on the chart so the next few days could be interesting.
The decline from earlier in the summer makes some sense in the context of transports being so vital to an expanding economy. If there is a slowdown or recession in the cards transports would be especially hit (this is not a bold call, just a normal reaction to a recession).
Posted by Roger Nusbaum at 6:04 AM