The definition of a bull or bear market can differ from person to person depending upon their particular discipline. My definition is based on the original works of the great Dow theorists, Charles H. Dow, William Peter Hamilton and Robert Rhea. When the Industrials moved above their 2000 high and was confirmed by the Transports a couple of months later in February 2007, I wrote then in an article that "things had changed." I stated at that time that this was not signaling the dawn of a new bull market, but rather, we were still operating within the context of the long-term bull market that began in 1974. You can read more about this at www.cyclesman.com/Articles.htm and my latest article on this topic is titled Bull and Bear Market Relationships. Another related article is titled, The Dow Theory... Did it Fail? Both of these articles can be found at the link above.

Anyway, the re-confirmation of the bull market in February 2007 carried the averages up into their last joint high, which occurred in July 2007. This can be seen in the chart below. From the August secondary low points the averages moved down into their August 2007 secondary low points and at that time the averages were still "in gear."

As the averages moved higher out of the August secondary lows the Transports lagged and did not confirm the Industrial's new high that was made in October. This set us up with a non-confirmation, which lead to a full blown bearish primary trend change on November 21st when both averages closed below the August secondary low points. This break is illustrated in green on the chart above. This bearish primary trend change carried the averages down into the joint January low, at which time both averages remained "in gear" to the downside. As the rally out of the January low failed the Transports held above their January low, but the Industrials did not. This left us with a Dow theory confirmation, which served as a warning that higher prices were in the cards and that is exactly what happened. In March my intermediate-term indicators triggered a buy signal and I told my subscribers in the midst of the most bearish sentiment readings since 1998 that a buy signal had been triggered.

Now the question is: Are we operating within the context of a bull market and was the bearish primary trend change that occurred on November 21st another "false" signal like the one surrounding the 2000 top?

In addressing this topic I must first state that I believe without a doubt that the Dow theory bearish primary trend change that occurred in association with the 2000 top marked the first phase a secular bear market. But, given the efforts to save the world I also believe that because of the massive manipulation the market was resurrected from the grips of the bear. As I have said all along, manipulation only serves to make matters worse and will ultimately fail. As a result of the manipulative efforts we saw not only the resurrection of the equity markets, we were also blessed with a housing bubble, an ongoing banking and credit crisis and now a commodity bubble. Point, being, the manipulative efforts have, just as I have said all along, only served to make matters worse. Rising commodity prices are now literally bringing the American consumer and small business owner to his knees and I continue to believe that the advance we have seen in commodities has been largely speculative driven. Also, there are statistical developments coming down the pipe in the not too distant future that will either tell us that the commodity boom is over, or that we are going to have years of pain left to endure. This will all be covered in great detail as it unfolds in my newsletters and short-term updates. I can tell you now that if the statistics unfold in a matter that confirms further inflation, then things are going to get a lot worse before they get better. Anyway, that benchmark is nearing and which side of the fence this statistic falls on will have far reaching implications.

Now, let's get back to equities. First of all, the bearish primary trend change that occurred on November 21st is still intact. Some have erroneously claimed that when the February highs were bettered a so called "Dow theory buy signal" was triggered. This is not the case. I can assure you that the November 21st bearish primary trend change is in fact still intact. Reason being, the February highs did not qualify as having been a secondary high point and in order to reverse the previously established bearish primary trend we must have a move above a secondary high point by both averages. As I read the averages I think that the May top marked the last secondary high point and that we are approaching a new secondary low point in the not too distant future. Depending upon the outcome of the advance following the coming secondary low, the averages should confirm one of two things. One, either the 2007 high marked the bull market top, or two, the primary bearish trend change that occurred on November 21st was just another "false" signal within the context of a still ongoing bull market. The reason I say this is that in accordance with Dow theory once a primary trend change is established you must consider that trend to still be intact until it is reversed. Well, again, nothing has occurred at this time to reverse it. Also in accordance with Dow theory, as long as price is operating within the boundaries of the previous secondary high and low point, the averages are of "no forecasting value." In other words, we have to have price confirm with either a move above or below a previous secondary high or low point.

Now, from a cyclical perspective, which has absolutely nothing to do with Dow theory, we are also moving toward some cyclical and statistical points that are of extreme importance and which will also have far reaching and profound implications. Just as we are moving toward a statistical window of opportunity for commodities to top, we are also entering into a statistical window of opportunity in which another significant top could be in the cards for equities. As I explained above the outcome of the advance out of the coming secondary low point is extremely important and should serve to confirm the statistical and cyclical hurdles that lie ahead. In doing so this will tell us if we are still in fact operating within the context of the bull market that began in 1974 or if we have finally slipped into a longer-term secular bear market. Given the pain that rising commodity prices have inflicted, it is hard to imagine that this will result in a bullish outcome for stocks. Furthermore, we are entering into a statistical and cyclical window as well as an important juncture from a Dow theory perspective that I would categorize as pucker time. But, anything is possible and regardless of the outcome, the statistics, cycles and Dow theory will all serve to confirm as we move forward into the very important juncture that we are now beginning to approach.

I have begun doing free Friday market commentary that is available at www.cyclesman.com/Articles.htm so please begin joining me there. Should you be interested in more in depth analysis that provides intermediate-term turn points utilizing the Cycle Turn Indicator, which has done a fabulous job, on stock market, the dollar, bonds, gold, silver, oil, gasoline, and more, those details are available in the newsletter and short-term updates. The June research letter has just been released and in it I give extensive analysis on commodities and the current setup in the equity markets. A subscription includes access to the monthly issues of Cycles News & Views covering the Dow theory, and very detailed statistical based analysis plus updates 3 times a week.