Black Holes And Event Horizons: Why The Bull Run Isn't Over

Jim Kelleher, Director of Research at Argus Research is convincingly bullish on the stock market's outlook.

Kelleher's short-term technical indicator remains "well above the high end of neutral" despite a slight dip in the market over the past few trading sessions. In addition, market internal and external data point to a bullish outlook over the intermediate-term.

Specifically, the 14-day relative strength (RS) remains in the low 60s and is consistent with where the indicator has been through most of the bull charge seen since the middle of the year. The analyst believe a reading in the high 70s (and higher) indicates a market top and potential pullback which serves as the first bullish indicator.

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Second, the moving-average convergence/divergence (MACD) is also "supportive of the market." Currently the MACD line is the 26-day EMA minus the 14-day EMA and the "signal line" is the 9-day EMA of the MACD line. As it stands, the MACD is slightly above the signal line which is "positive" rather than a spiking MACD which signals an "overbought situation ripe for correction."

The Black Hole

Kelleher noted that in space, there is a point in which nothing can escape being drawn into a black hole. Back on Wall Street, the same concept holds true as at some point in late September or early October the stock market "reaches its own 'event horizon,' beyond which the counter-vailing tendency of the prior nine months is sucked in and succumbs to the prevailing tendency."

In other words, if the stock market has been bullish through the first nine months of the year it "gets really bullish" in the final three trading months.