Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Friday, April 1, 2016

S&P Longterm Bear Market Signal Still In Play

Back in my March 6th blog, I wrote about how the S&P 500 monthly bars chart with a 10 and 20 moving average is widely accepted as the universal indicator for longterm bull markets and longterm bear markets.  Since then the prop the market coalition has forced the biggest stock market squeeze in history.  Today being the opening of a new monthly bar, it is time to re-examine that chart below.

The up crosses and down crosses of these two moving averages are widely used by Wall Street and institutional money managers to mark the beginning of longterm bull markets and longterm bear markets.  

On March 1st the down cross appeared and the make the market do the opposite effort was initiated.  Looking at the closeup view of last month's down cross in the focused view on the right, we can see that the monster short squeeze has pulled the tip of the red line up from a thirty degree downward pitch that it showed back on the chart in my March 7th article.  After the opening of Friday's new bar, the red line is horizontal underneath the green line which is impressive for one month of movement but the way the chart works, it is still a longterm bear market until if or when the tip of the red line appears above the green line.  It's that simple.  

Considering there is a bad earnings season beginning next week (top line revenue-wise but expect estimate beats as the bar has been guided so low that they are in danger of tripping over it), it's obvious why the market had to be forced as high as possible before this begins.  

The normal down cross progression can be seen in the previous two longterm bear market down crosses.  It will be interesting to see how these lines interact in the next few months after being artificially altered.  

Trade well my friends

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