Stock Market Investing, Stock Market Timing, Uncategorized

Will We Truly Go Full Bear?

So, like I said I would, I looked at all those ETF’s for the foreign countries and regions, and guess what? They all look like our market, for the most part… and, they all reversed last Wednesday the 20th, too!

That’s right, folks, all the world looks to be in a similar Bear Market pattern as our own market, and has reversed to the upside as of Wednesday the 20th, and will be rocketing back toward their downwardly sloping 50 and 200 day moving average lines! The difference is this, however… and, it is significant: None of those have put in place anything resembling our triple-bottom level of support on their charts. Instead, they have nearly all put it lower highs, and lower lows, since last April, May or June! That means they are nearly all in genuine confirmed full-blown bear markets for sure already! Only we have not joined that chorus!

Studying the day, Friday, with 1 minute price bars and volume was fascinating! Especially the final moment, when volume spiked massively, and the last-minute candlestick was a Bullish Engulfing type. Looking again at the last 4 after-hours of trading, there was no particular selling going on trying to undo what the entire day had accomplished. It was a very strong and healthy day!

Now, for my verdict: I can’t seem to find it, but there was some rather poor economic news releases Friday, and interest rates lowered pretty much all around the world upon Japan’s announcement to go with negative rates. The entire world is precarious right now. Deflation is a serious issue, as prices of commodities are dropping, and have dropped to economically disruptive levels that are creating economic dislocations among all those industries involved in the production of those commodities. In other words, the people in those industries are experiencing lay-offs and are getting hurt! But… for those of us who are benefiting from those lower prices, doesn’t our savings result in more economic activity in all other areas? The answer appears to be no, as it is being said that people are taking these cost savings, and using them to pay down their own debts.

The world’s stock markets are already in Bear mode. I can see that plain as day. Will ours survive??? I am thinking that we will not. I am of an opinion now, that this present rally may well be something of a last hurrah, and that after it plays out here, in the relatively near future, I believe that the greater likelihood is that shareholders are going sell into the rally, and perhaps, as it might also be able to ‘kiss’ its 200-day moving average, which it was able to do the last 2 Bull to Bear transitions, that the bottom would fall out and the market go away, taking out the triple-bottom support that is currently this market’s floor.

We can see right where it is at now. We see just what it has begun doing recently, which commenced on Wednesday the 20th, but we also see that it caught some true fire on Friday, right thru much of the entire day, and especially going into the very last minute. Now, what we need to see next, as this is so very common with a real market rally, is that after a big day like Friday, it pauses to catch a breath, and confirms to the upside by having another similar strong day… usually 3 to 7 business days later. Or, in other words, if this rally is going to show real signs of life, we should be able to expect and watch for another good ‘pop’ day somewhere in the Feb. 3 thru 9 period. And, that if we don’t see one after 10 business days pass… history suggests that this market just might then come off the rails, if it cannot confirm the upside within that 3 to 7 day period.

What should an investor do? Selling some good gains, along with some offsetting losses, so as to raise cash and reduce any tax consequence, that won’t even get reported until April of next year, is not a crazy idea at all. The world is nervous, and frankly, we should be, too, as there is some clear handwriting on the wall… only the final words have yet to be written. Wish I could find my 8-Ball and shake it! It would probably say.. Outlook Cloudy, Try Again Later!

Here’s to your successful investing!
Harold F Crowell

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4 thoughts on “Will We Truly Go Full Bear?

  1. All the “Years of monkey” have one clear common element – Unpredictability. IMHO we are to be encountering very mischievous, impish markets throughout 2016.

    Cheers

  2. I get a very distinct impression that you are not in the U.S. Your use of English has me a bit confused. But, if I understand you, I’d say this would likely extend even beyond ’16, and, if it is the real “Debt-Bomb” finally going BOOM! We could be staring into the abyss of another world-wide economic contraction… not unlike the 1930’s.

    • You get the right impression, I was born in Europe and spend most of my life there as well as in India and in China Never been to American continent. My wife is Chinese and she pays attention to Chinese astrology (year of monkey starting next week suppose to be the most confusing from the 12 year period). I lived in South India with monkeys around (clever and mischievous animals). So we just have to be super-careful this year – it will be truly unpredictable year.

      IMHO The biggest problem is: what will happen, when in market capitulation, the HFT algos pick it up and drive it to extreme without humans involved? We may see prices driven to the bottomless pit very fast.

      About the English language – I learned in Turkey from some African emigrants.

      Cheers

      • I’m joking… but, my goodness… You’re some kind of FREAK!!! Haha I totally appreciate the ‘outside’ perspective you bring, that I will almost certainly never have! Looking past all of that, I get this same impression that we’re about to go for a long and difficult ride that no one would willingly sign up for! Agreed?

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