General Market Cycle

Bull Market

• Average 3 yrs 6 mths

Speculative Phase

• ~ 1 year
• Up almost every month
• Due to government policies to try to boost confidence
• Economy still in bad shape
• Unemployment still high
• Economic outlook bleak
• Interest Rates very low
• Blue chips will run first, then smaller stocks

Consolidation Phase

• ~ 9 months to 2 years
• Less than 3 consecutive months of index going up
• Experts questioning the effectiveness of government policies
• Eg. Double dip recession possible?
• Every 10 - 15% drop in index is good time to accumulate

Growth Phase

• Economy starts to pick up
• Unemployment improving but still high
• Economic outlook better but still uncertain
• Interest Rates still low
• Historical high not broken

Super-growth Phase

• Economic outlook very good
• US GDP > 3.5%
• Historical high broken
• Interest rates > 3.5%

Bear Market

• 3 consecutive down months
• Index drop by 30%