In a previous post, I had addressed the technical issues of why I believe the market has about 14-18% more room to go up before we see another correction. Now I would like to address the fundamental characteristics. Everyone is looking at their calendars, its May. They are looking at their charts seeing the indexes scraping the roof. They are scratching their heads and wondering when there will be a 10% correction. Even notable bloggers like www.tradertim.blogspot.com are flogging themselves wondering why they cant make money on the IWM puts nowadays. Behind the scenes, brokerages like TDAmeritrade are reporting that retail investors are sitting on the sidelines and waiting for what is to come next. Probably a lot of retail traders were ruined during the May 2006 correction and did not want to repeat the episode. (by the way, AMTD will be purchased in the future. notice how its gained 16% since the earnings call?) While I have heard people talk about the stock market, no one here has mentioned the bond market. The only talk about the oil market has been over in the energy futures section. Everyone is constantly talking about getting short and buying puts. When I look at the charts of the ten year yield, it appears to me that this might fall off a cliff pretty soon. I mean, if the yield was to be analyzed like a stock then I would have to say thats a large head and shoulders on the weekly with the target interest rate at 4.1. Then there is the oil market. I was under the impression that oil will probably go much higher from here. I was thinking that this was just a large correction in the course of the macro bull run for oil. However, there was a slight turn of events last week. Oil has retraced exactly 50% of its fall from the Summer of 2006 and now it seems to be turning lower. It did not break through 67 dollars which is a very bearish turn of events. There is a small head and shoulders that is developing and the neckline is about to be broken. As for the puts and short interest, they keep flying off the shelves. The put/call ratios and isee #s illustrate a market in which there is still a lot of bearishness. My point is this. Bull markets are fueled by low interest rates, low oil and bearish spirit. Next week will be a pivotal point. Bernanke's speech will directly effect interest rates. If the ten year yield breaks through 4.6, then the target price for the h/s becomes 4.1 Oil appears to be at a pivotal point too along with the $GPX. If Oil cannot go higher then 67 dollars, then I see it going to 38 dollars in the future. As for the bearishness and puts, its so there as illustrated by the high open put interest for May on the IWM. On messageboards like these, you almost always see inferences to 1999 when the market is gapping up. Its important to note the full extent of the rise back in 1999. The S&P500 had gone up 65% in the course of a year. The Nasdaq100 had gone up over 400% in the course of a year. When looking at today's indexes, the Nasdaq 100 is only up 31% since its low in 2006. The S&P500 is only up 23% since its low in 2006. While these are great numbers, its hardly 1999. China appears to be in a 1999-2000 like bubble. However, you must take into account the key component of the rise, growth. In 1999-2000, I did not quite see the same growth in the United States as I do in China right now. In 1999, I didnt see huge buildings going up and brand new highways paved across the nation. The GDP change in the US in 1999-2000 I believe was anywhere from 4-5%. In China, the numbers are over 10%. Many people, including myself, questioned the rise of Google from the 80s to the current level. We still had the picture of the tech bubble in our head and believed that Google was just another tech bubble. Indeed, I was witness to the old Excite building in Mountain View go from a populated brand new thriving office building to an empty lot with a "for lease" sign hanging out front. You have to ask yourself. Was the United States in the same growth mode as China during the tech bubble? Was Excite in a different growth mode then Google? I guess it was different that time with Google then it was for Excite. I have a famous comparison of American Airlines and Delta. It was 2003, all over CNBC was talk about American Airlines going bankrupt. The stock of the company fell down to 3 dollars. It was pure panic. Then we saw American Airlines skyrocket after that. Then Delta Airlines came along with the same story. Everyone thought it would be no different this time around and piled into the trade. Shortly afterwards Delta announced that it was going bankrupt. Millions of dollars were lost that day amongst traders who thought and believed it wouldnt be different on the second go round. So if your sitting there waiting for the indexes to tank back down because we have hit May, it might be just different this time around. The next large correction in the S&P500 may not be until it strikes 2200. Then that will be the time go short.