This Bull Market Is Looking Like A Bear In The Making

This Bull Market Is Looking Like A Bear In The Making

$DIA, $SPY, $QQQ, $VXX

This Bull Market is not charging the way that it used to for lots of reasons.

Uncertainty is holding it back, the downward earnings estimate revisions is holding it back, the stronger USD in a less-than-robust global economy is holding it back, the high valuations are holding it back, and given the lack of a meaningful correction in 4 years is holding it back.

Hang on, that correction happened in late August (many thought it and anomaly) and there is a reasonable basis to think it is not over yet.  And my work shows that there is a reasonable basis to believe it could go beyond a correction and form into a Bear Market.

If the global economy continues to fade, and takes earnings estimates down with it, then it is a probability, not just a possibility, some analysts I read believe we are already in a Bear Market.

For a Bull Market that has not  seen a 10% correction in 4 years, the transition to contemplating the possibility of a Bear Market has been fast, and it got faster Monday.

The signs of risk are there for everyone to see and it would be foolish to completely ignore the details inside this market now.

The NAS 100 became the last of the 3 US major market indexes to flash a Death Cross, in which the 50-Day MA falls below the 200-Day MA. The index is on track for its worst Quarter in about 3 years.

US stocks closed sharply lower Monday as uncertainty about the timing of a rate hike and concerns about global economic growth continued to weigh on sentiment.

The S&P 500 closed down about 2.5%, falling below the psych mark of 1,900 for the 1st time since 26 August. The high flying  healthcare sector fell more than 4% as the greatest decliner.

The DJIA closed near session lows, off 312 pts, but holding just above the psych mark at 16,000 level. Earlier, DJIA dipped below 16,000 for the 1st time since 1 September The last close under that level was on 25 August.

DJIA-312.78 at 16001.89, NAS 100 -142.53 at 4543.96, S&P 500-49.57 at 1881.78

Breath and Volume: The major indices closed just off their worst levels of the day on heavy volume.  Reflecting the entrenched negative bias, decliners led advancers by nearly a 9-to-1 margin at the NYSE and a nearly 6-to-1 margin on the NAS.  NYSE 1.05-B/shares, and a composite volume of nearly 4.3-B at  the close.

The CBOE Volatility Index (VIX) considered the best gauge of fear in the market, traded above 27.

Stay tuned…

Paul Ebeling

HeffX-LTN

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