I don't usually spend much time pondering the big picture, because it's not useful in my trading time frame. But since it's been 3 years since the market bottomed, I thought I'd give it a try. The general consensus is that the market has experienced a cyclical bull within a secular bear. Some pundits even call it a bear market rally. I disagree – I think the last 3 years were just the first up leg in a new secular bull (wave 1 in Elliot Wave terms) - and it's not over yet.

Most developed economies are still in deleveraging mode, but central banks have been successfully countering this with massive money printing. However, at some point they will slow down the money printing - probably just as the US government goes into austerity mode (perhaps next year) – an event like that would cause a significant market decline (wave 2).

If the secular bear is still alive, this decline should violate, or at least test the lows of 2009. I see almost no chance of that happening – because central banks will not allow it. They will restart the printing press long before it gets to that point. And when they do, it could signal the start of a major up leg of a secular bull (wave 3).

During the last 3 years, I've heard a lot of bearish pundits complain that they would have been right if not for the actions of the Fed. Duh!!! Fed actions and the resultant money flow is one of the most important factors in market movements – how can anyone not factor that into a forecast? Just compare US & Chinese markets these past 3 years – economically slow growing, Fed easing US markets have dramatically outperformed fast growing, central bank tightening Chinese markets.

Of course, money printing can only take things so far – without real economic growth, it will just cause stagflation, which is not particularly market friendly. There will also be headwinds – retired baby boomers withdrawing money from the markets. David Foot makes a good case that the secular bull of 1982-2000 was due to boomers in their peak earning years pouring cash into mutual funds. So when they take money out, it should hurt the stock market. But judging from money flows out of stocks and into bonds the last few years, some of this has already happened.

So what would power a new secular bull? A dramatic shift of growth and consumption from the developed economies to the emerging ones. This trend has been in place for years and will very likely accelerate in the future. Remember, the population of the developed world is dwarfed by that of emerging market countries. Every year millions of people in these countries join the middle class – more and more money and consumption to fuel a brand new secular bull market, methinks.