Many people would consider a drop in the S&P 500 to the 1550-1600 area to be a bad thing. But if the bull is real, and if a secular bull market truly has been created out of manipulation of the T bond market (QE’s bond buying and ZIRP’s 0% rates) then a pullback to test that zone would be normal, would it not? It would feel bad but in reality a successful test of the big breakout would launch the grand new bull. SPX has to drop down to test support sooner or later, doesn’t it?
Well no, it doesn’t because the other side of the coin in the post’s title is ‘When Good is Bad’, meaning that an upside blow off in markets – if that is what is fomenting – would be very bad, as in ‘Silver 2011’ bad, for the stock market with a successful test of support unlikely. That is because a manic blow off would be a terminal event.