Sunday, January 17, 2016

Is That a Bear?

Last week was not a good week for the markets.  As we mentioned, our thought was the downtrend had started and the stock markets would drop further.  Let's review a few charts and see what happened.  Can we determine if the trend will continue down?

The daily BPXPX has continued it's path straight down. It's well below the 200, 50, and 30 MAs.  It's been a consistent drop since the start of the new year.

The weekly BPSPX is showing a similar pattern as the daily, except the RSI and MACD show we are in an earlier stage than many people might assume.  Could this lead to a further drop?

The daily SPX is at support going back to September and August.  We could see a bounce as we did back in October and August. If it falls through support... well, it's not good... take a look at the weekly below.

On the weekly SPX, it's easy to see the next support is around 1820 and then 1770.

We follow trends and according to the charts above, the trend is down.  We would not be surprised by a minor rebound this week, but more downside will likely follow.  Over the next few weeks, maybe couple of months, expect a further drop.

  • 401K/IRA
    • If still invested, get out now!
    • If you're in cash then stay on the sidelines and wait for something to develop.
  • Stocks/ETFs
    • Only invest in VERY strong patterns.  Do not forget to have a STOP LIMIT for open positions.
To answer our blog title; yes, we believe we are in a bear market.

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