Signup for our free newsletter:

Bulls Lead Midsummer Rally

Written By Brian Hicks

Posted July 17, 2007

To almost any sane person, a 1,300 pound bull is nothing to be fooling around with. An image of power, the massive animal is really nothing more than muscle, hooves, and horns. And then there is the attitude–it’s pretty nasty.

So why anyone would want to be in the same pen, let alone get chased by one down some slippery cobblestone street is beyond me. Chalk it to up to machismo, I guess, or more likely foolishness.

But that is exactly what hundreds of insane people do every year in the same streets of Pamplona, Spain, made famous long ago by Ernest Hemingway.

Among the crazies this year were two Americans, the Lenahan Brothers. But they tangled with the bulls and lost. On Thursday one not-so-friendly bull reduced the two of them to a bloody mess, goring them both at the same time, one on each horn.

"I remember looking back and thinking I was in trouble," Lawrence Lenahan said later from his hospital bed. That’s where twelve other unlucky runners joined him for stitches, bandages, and bed rest.

But that wasn’t the only pain dished out by a rampaging set of bulls that day.

That same day on Wall and Broad Streets the market bulls ran a bit wild, too. The Dow jumped 284 points in the day as the bulls once again managed to grab the momentum after practically treading water for the last two months.

It was the biggest one-day move for the average since 2002, and has had the index constantly flirting with the 14,000 mark ever since, dumping nothing but pain upon the bears with all their nervous talk about double tops.

But what the newly formed midsummer rally really proved was as simple as the lesson learned last week by the Lenahan brothers–that the bulls are indeed dangerous.

All of which makes me wonder why anyone in his right mind would want to jump in front of them these days by being short these markets. They are simply too strong to go against at the moment.

In fact, with this year only slightly more than half over, the Dow has now achieved some 30 record closes and is up over 18% since we went out on limb in October and began talking about the unheard-of level of 15,000 by the end of the year. The Dow, you may remember, was trading at about 11,800 at the time.


So far, so good. All that it is going to take now to reach those levels is another 7% to the upside, which at this point seems likely.

Joining in that steady drumbeat higher, of course, will undoubtedly be the techs, which have really been quite strong throughout the year. After all, where would the growth be without growth companies?

Driven in part by the phenomenal overall expansion of world markets and the commercial emergence of new technologies, the tech sector now seems to be actually leading the way higher into the new rally.

In fact, to some observers, such as Cisco’s (CSCO:NASDAQ) CEO John Chambers, the rally in techs these days is just the beginning. A new era that will "surpass the dot-com boom," he says, is just around the corner.

According to Chambers, the introduction of consumer-driven Web 2.0 technologies into the workplace is set to usher in a new phase of productivity growth that could outdo the levels achieved during the Internet boom of the 90s.

In an interview with the Financial Times, Chambers said, "We are at the very beginning of the next phase of creativity that will last, I think, a minimum of 10 years, probably 15 years. But it will have more impact because the power of connecting the many to the many allows you to do things at a dramatically different speed."

Social networks, wikis, teleconferencing and other technologies that allow interaction on a large scale, says the head of the networking giant, could change entire business models.

It is that type of game-changing growth and the emergence of an incredibly strong global marketplace that has helped put the markets on the levels they have reached today, and given the bulls the momentum they need to push them higher still.

It’s a move that I absolutely believe will continue. After all, jumping in front of a bull on a rampage is kind of foolish even for those that live tell about it.

See you at 15K.

Wishing you happiness, health, and wealth,


Steve Christ, Editor