Depends on several factors, and not trying to be evasive:
1) What happens to the dollar
2) How much longer the Fed intervention continues
3) the depth of the phase of the depression we are currently in
If the dollar breaks below 73, and the market doesn't exceed its highs from April, this is a bear market for at least through 2012 and into 2013.
If the dollar exceeds 80, and the market exceeds those same April highs, I'd say we are in a new bull market.
Thats a simplistic explanation and doesn't take into account items 2 and 3.
Thus far the entire rise from 2009 has been due to Fed intervention and pronounced dollar weakness. And just because the dollar is currently the least worst of all the bad currencies out there, doesn't mean its current strength is a good sign. The euro is on the cusp of ceasing to exist, so the current dollar strength notwithstanding, is of little surprise. Right now, the entire market seems to be at the whims of the Euro. But at the same time, there are a whole ton of people who want to flee US trash (debt), but have nowhere else to put that kind of money. SO they risk putting it there temporarily, even despite it making next to nothing. In a sense thats capital preservation. But thats not wealth accumulation or growth by any metric.
This could all be over in a heartbeat if:
1) The Fed stopped all intervention, let the market do what it wants to do, everything gets revalued, and the government stopped all the deficit spending. It might be harsh for a couple years, but the alternative is two more US decades worse than Japans last 2 decades.
2) The EU were allowed to break apart, back to its natural constituents.
3) we let the derivatives markets crash, and burn.
Where stocks would end up after all this is anyone's guess, but after the fall out, rest assured a new bull market would ensue. Stocks are not cheap now, BY ANY metric you want to use. Earnings have peaked, but that doesn't mean the FED can't continue to keep intervening, and whipsawing this market so it trades sideways in a years long consolidation range, that blows out bulls and bears alike.
When I look at many technicals from many different people who seem dam good, the only thing I see thats consistent is massive manipulation thats rendered most technicals obsolete other than for a very short period of time. When I see people looking at the same set of charts, and giving completely opposite interpretations, it tells me there is again much manipulation. HFT's and algo's have also furthered the obsoletion, and everybody is all trading the same signals. Its who can outgame the signals themselves.
Where does China end up in all of this ? Basically, nowhere. China is still the tail that wags the US dog. Anyone who thinks otherwise has been brainwashed. China could implode upon itself at any time, and the world wouldn't notice the difference. Things might actually be better for the rest of the world if that happened. We'd all have far far more resources. But the US IS NOT Dependent upon China or its cheap goods. China IS dependent entirely upon the US. It has no other meaningful market. All the sh&t china makes for us now, could be brought back to US shores in a heartbeat, creating many more jobs, and using technology to replace the millions of chinese workers by a factor of 10 to 1. Even if we only created 1 job for every 10 of China's we'd wipe out, there's still more than enough jobs that the US could bring back to reach full employment. Only thing preventing that right now is A) Our goverment,
our government and C) us based corporations.
The same could happen for India.
