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Potential? It is a Bear Market!
Only two days ago, I wrote that there is a “potential for a bear market”. Potential? Forgetaboutit. This is a bear market.
My analysis really has little to do with Monday’s price action which saw the major equity averages down over 6%. While the closes below key pivot points foretold possible trouble ahead, it is those other important charts that I warned about that are spelling “b-e-a-r- m-a-r-k-e-t”.
Figure 1 is a weekly chart of S&P Select Financial SPDR Fund (symbol: XLF), which is an ETF representing the all important banking sector. I first warned about XLF on July 19 and then again on August 3. More importantly, a close below 3 key pivot points (those red dots on the price chart in figure 1) is bearish. Period. (And when I mean period, I am talking about a pattern or breakdown that has been tested across multiple assets and market periods.) 13.97 is now resistance.
Figure 1. XLF/ weekly
Figure 2 is a monthly chart of the i-Shares MSCI Emerging Market Index Fund (symbol: EEM). I showed this chart of June 24 and stated: “This is the first real technical warning sign that the market is on the verge of breaking down and the economy is on the verge of a recession. “ The cluster of negative divergence bars (pink labeled bars) is a reliable sign of a market top, which is seen across asset classes and time frames.
Figure 2. EEM/ monthly
Figure 3 is a weekly chart of the i-Shares FTSE China 25, which I highlighted on July 18. Here we have a close below 3 key pivot points, and there is little support below.
Figure 3. FXI/weekly
When looking at these 3 charts – banking, emerging markets, and China – it is hard to make the case that we are NOT in a bear market already.
And to all those readers with IQ's greater than 145, let me remind you what I wrote on Sunday: "This isn’t the time to hope. This is the time to take some action to protect yourself and your money."
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so charts say no QE3 for the moment...only after a bigger crash
'And to all those readers with IQ's greater than 145, let me remind you what I wrote on Sunday: "This isn’t the time to hope. This is the time to take some action to protect yourself and your money."'
WTF? Don't patronize me, you dipshit! I think you meant 'less than', Genius.
Once the S&P gets down around 1100, if you aren't buying at least something you may just just remain in cash forever. Sure, it might go lower. Keep powder dry. But for god's sake, take some shots, too. They might come closer, but they also may never be this close again.
1987 comes to mind. Those who bought at S&P 282, after a 15% drop, kicked themselves for about a year, and then they quadrupled their money over the next 12 years. Those who held back and refused to buy at S&P 225, saying "I'll wait for 200, we haven't dropped far enough" watched as the bull market proceeded run far, far away from them, never to return.
Who knows, maybe some of those guys from 1987 are still sitting there, waiting for stocks to come back for them. They actually got a glimps of them in 2003, and again in 2009. But in the meantime they're just sitting on cash, as it melts away with inflation.
I like this.. I agree. I understand that things are bad. The US economy is in the shitter. But this is an extreme sentiment move... we took one on the chin. The USA has been taken down a notch. It hurts our pride, and our hurt pride is reflected in the market of the past week. But we are still in a global expansion. Until that changes...
I've been making buys. High quality, Large-cap, dividend growers. Slowly though. I need to see the market reinforce these new supports... and thankfully I have cash on hand and large gold posish.
Hell, we could be wrong though. European banks. Dependance on EEM. Housing. Jobs. God only knows...
I've made a lot of money the past couple of weeks investing in SKF (ProShares Ultra Short Financials). Added more to my position today.
Housing recovery slips out of sightBy Les Christie August 9, 2011: 5:21 AM ET
http://money.cnn.com/2011/08/09/real_estate/home_price_recovery/index.ht...
recession?
otherwise, nicely done, techtake: from my mouth to the chart's ears.
sentiment moves fundamentals.
Is this a transitory secular bear market or a transitory cyclical bear market?
What looked like a bear, turned into a raging bull once QE2 was announced. QE3 has already started but investors have not recognized it yet. It started when oil was sold in a coordinated way a couple of months ago. Once it gets noticed, this bear may turn again.
time123
admin at http://invetrics.com
Now look:
Where's Leo?!!
Where's our Bull gone!
Leo was last seen stuffing his account with Argentine winery stocks and Chinese solars last Wednesday.