Two weeks ago, we highlighted how The Cabot Market Letter — one of the best-performing newsletters of the past decade — was turning bullish on stocks. Now, in the newsletter’s most recent edition, editor Michael Cintolo writes that “every one of our market timing indicators has now turned positive. … In short, the stage is set for a great profit-making bull market.”

Cintolo says two reasons that the newsletter’s indicators are bullish are that the market’s long-term trend is now up, and the market’s internal health is “absolutely wonderful”. (As evidence of the latter, he cites a recent day when the Dow fell 186 points, and only six stocks on the NYSE hit new 52-week lows.)

The bullish indicators don’t mean that it will be smooth sailing, however, added Cintolo in his April 8 commentary. “For example, the just-completed four-week rally was led by the worst sectors and left the major indexes overextended to the upside on a short-term basis, and it would be perfectly normal for the correction that began Monday to go deeper from here,” he wrote. “Furthermore, the rally lifted the spirits of investors so substantially that we think a couple of fear-inducing shocks would be quite appropriate now; remember, bull markets climb a wall of worry. To get a deep, sharp correction from here would be quite satisfying … particularly if our favorite stocks hold up.”

Cintolo said continued fear is a good sign for the future. “The market hasn’t brought triple-digit profits in individual stocks for quite a while,” he writes. “More important, no one is expecting such profits from here; fear continues to have the upper hand in the stock market, as well as in the business world. From a contrary point of view, that means triple-digit profits are quite likely in the months ahead!”

With earnings season approaching, Cintolo says that “job one is to avoid being hurt by earnings disappointments. Job two is to put yourself in a position to benefit from earnings surprises. Ideally, surprisingly good earnings reports by young, little-known companies will attract new institutional buyers. Money will flow from faltering old stocks to vibrant young stocks. And our Model Portfolio will become more fully invested as the bull market attracts more investors and leadership solidifies.”