Riding the Bull: How Much Further Can Stocks Climb?

Hayes Martin, a strategist in the stock market, has both positive and negative updates for those who have optimistic views on the stock market.

To begin with the negative aspect, Martin predicts that the ongoing decrease in the market will ultimately result in a decrease of 8% to 13% in the market averages. (As of August, the S&P 500 index has already experienced a decline.) On a positive note, Martin assures that this upcoming decline will not signify the termination of the bull market or the initiation of a new bear market.

I frequently rely on Martin, the president of advisory firm Market Extremes, for valuable insights. Whenever I receive an email from him, I make sure to give it my full attention. It is worth noting that his advisory service and my auditing firm do not have any professional agreement regarding the calculation of his service’s performance.

On August 1st, Martin sent an email later in the day. Unlike his previous emails where he expressed confidence in the market’s growth, in this one he mentioned that the market’s internal factors were worsening. He stated that while he doesn’t anticipate a significant decline, we should be ready for a more substantial temporary setback. Therefore, he advised adopting a defensive stance in such circumstances.

Between August 1st and August 15th, the S&P 500 SPX decreased by 3% while the Nasdaq Composite COMP showed a decline of 4.6%.

In a subsequent email, Martin expressed that, according to his findings, there is still more room for improvement in this correction, with a range of 8% to 13%. However, he noted that his analysis indicates that the market’s internal factors have only slightly worsened compared to the significant deterioration witnessed during previous bull-market peaks. He further stated that he anticipates the progress to continue once this correction reaches its conclusion.

When taking into account Martin’s analysis, it’s important to recall his previous statements from the past year and a half. For instance, during the bearish market in late May/early June 2022, he accurately predicted that there would be a rally in the market, specifically in the technology sector, with a potential increase of 15% to 25%. As evidence of his accuracy, the Nasdaq Composite rose by 16.5% in the following three months.

After the rally came to an end, the bear market made a strong comeback, and by early October 2022, the Nasdaq completely eliminated the 16.5% gain achieved during the rally. At that time, Martin predicted a significant “reflex bounce” in the market, although not a new bull market. This bounce would result in the market averages increasing by 10%-15%, and the technology-dominated indexes potentially experiencing gains of 15-20%. The market hit its lowest point on October 12. Though Martin initially did not anticipate a new bull market in early October, and only became more optimistic later on, he should be acknowledged for accurately forecasting a powerful rally.

So, if you believe in Martins’ analysis, it would be wise to adjust your stock portfolios to a more protective stance.

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