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发帖数: 3104 | 1 The S&P 500 gave a bear market signal on July 2nd; while the small cap
Russell 2000's decline reached bear market territory.
All the major U.S. stock indices had significant losses last week and Friday
capped it off with more evidence that stocks are no longer in a bull market
. From intraday peak to trough, the Russell 2000 has lost 20.2% so far. The
definition of a bear market is a 20% loss.
The S&P 500 signaled it would be joining the Russell soon with its simple 50
-day moving average falling below its 200-day. This is the classical
technical definition of a bear market. Mathematical inevitabilities indicate
that the S&P's 50-day will be falling sharply in the next two weeks putting
more distance between it and the 200. The 200-day itself is still slowly
rising and will have to turn down to complete the bear trading pattern. The
S&P 500 should be close to a 20% loss when that happens. It has already lost
16.7% peak to trough in the latest sell off.
The Dow Jones will join the S&P 500 in giving a bear market signal by July
7th at the latest. The Nasdaq will follow the Dow shortly thereafter.
Ironically, the last major index that will have a 50-day, 200-day cross will
be the Russell 2000. It will obviously be anticlimactic when it happens.
Both the Russell's bear market loss and the S&P 500's bear trading signal
were foreshadowed by the first four trading-days of the month indicator.
Stocks sold off in the beginning of May and June and two months in a row
indicates a bear market. Stocks have sold down the first two trading days of
July so far, even though the day before the July 4th holiday has a high
probability of being bullish. At least a small rally is quite likely in the
next two days however. The Dow Industrials have sold off seven days in a row
as of Friday. The last time the Dow sold off for eight consecutive days was
in October 2008 at the height of the Credit Crisis. Conditions now would
have to be worse than they were then for a nine day sell off.
Disclosure: No positions |
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