Analysts Not Sure if There’s a Bull or Bear in the Future

Where is the stock market headed?

Market timers and technical analysts are picking up mixed signals.

“We could well be in the early stages of a bear market,” said Dan Sullivan of the Seal Beach-based Chartist newsletter, noting that the technology-dominated Nasdaq composite index is already there, still off more than 20% from its recent peak.

“There is tremendous confusion,” said Alan Farley of Hard Right Edge, a Littleton, Colo.-based Web site geared toward short-term traders. He notes that although rallies may kick off in many stock sectors, they generally don’t last long.

Some timers worry that investors are counting on the fourth-quarter rally typical of presidential election years, as well as the October blastoff common in recent years--and that they could start panic-selling if such moves don’t materialize.

Others see a dismal market for an extended period.

“We could be in for a long sideways move, maybe five or 10 years or longer, punctuated by bear markets,” said John R. McGinley Jr., editor of Technical Trends, a Wilton, Conn., newsletter that has suspended publication.

“Historically, it would make sense after such a dramatic bull market, and valuations are now stretched to where there is little or no upside,” McGinley said. “The fear-to-greed quotient has gotten out of control on the greed side.”

But Louis Navellier, editor of the Reno-based newsletter MPT Review ([800] 454-1395; https://www.mptreview.com; $275 a year), has a bullish take.

“We could see a rally after the Fed meeting when the uncertainty [about interest rates] is lifted,” said Navellier, an aggressive trader who uses technical analysis tools but doesn’t consider himself a market timer.

He expects other factors to contribute to a strong fourth quarter, including robust corporate earnings reports in October and a campaign-season bounce after Labor Day as the presidential race intensifies.