This Market Is Looking Like A In The Making


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 in a less-than-robust global 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 are there for everyone to see and it would be foolish to completely ignore the details inside this market now.

The 100 became the last of the 3 major market indexes to flash a Death Cross, in which the 50-Day falls below the 200-Day . 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 .

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 closed near session lows, off 312 pts, but holding just above the psych mark at 16,000 level. Earlier, 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.

for DIA: OverallShortIntermediateLong
Bearish (-0.36)Bearish (-0.43)Bearish (-0.44)Bearish (-0.38)
Analysis for SPYOverallShortIntermediateLong
Very Bearish (-0.52)Very Bearish (-0.56)Very Bearish (-0.56)Very Bearish (-0.53)
Analysis for QQQ: OverallShortIntermediateLong
Bearish (-0.34)Bearish (-0.41)Bearish (-0.35)Bearish (-0.25)
Analysis for VXX:OverallShortIntermediateLong
Bullish (0.35)Bullish (0.27)Bullish (0.35)Bullish (0.43)

Stay tuned…

Paul Ebeling