Don’t ever take a fence down until you know why it was put up. – Robert Frost

We have seen the same song sung over and over again by the Doctors of Doom; the markets are going to crash, the world is going to come to an end, or some other pretentious title. Let’s cut to the chase, the markets are not going to crash; they could experience a strong correction at some future date but that would just present you with another opportunity to buy quality stocks. Could the markets crash? That is a possibility, but you could kick the bucket before the event plays out the way the naysayers have envisioned. In fact, one could go as far as to state that there has never been a real market crash in the actual sense of the word and that every so-called crash event was nothing but a buying opportunity in disguise. Crash or correction is a matter of perspective and that perspective depends on where you boarded the train; if you got in towards the end of the ride, then it will indeed feel like a crash. We will examine this concept in more detail in a follow-up article.

Less than two months ago a lot of fuss was made about the death cross formation on the Dow; we immediately repudiated that nonsense and stated the Dow would continue to trend upwards. Fast Forward and the Dow followed the projected course. Now some professors are stating that all is not well with the NYSE and that it is signalling a massive breakdown in the markets. With the advent of Quantitative easing and an ultra low rate environment that has been artificially maintained for an inordinate amount of time, many technical indicators ceased to function normally. As the situation had changed and the Fed had eliminated all semblance of free market forces, the laws of the jungle came into play; adapt or die. It is hot money that is powering this market and it is hot money that will continue to fuel this market, much to the anguish of the naysayers. The bull market will end one day but that day is not yet upon us. We do not believe that the NYSE Index is signalling impending disaster; at most it is signalling that another correction could be in the works, with extremely strong emphasis on the word “could”.