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Bearish Confirmation

Recs

26

May 25, 2010 – Comments (27) | RELATED TICKERS: BE , A , R

We have closed below the 200 day MA for 3 days in a row and the 200 day MA is starting to flatten. The 20 day MA has convincingly moved under the 50 day MA and the 50 day MA is turning down. But the biggest inicator that the is a bear market move with staying power is that we broke the Feb lows on a number of indices (S&P 500, NYSE Composite, Dow Industrials). This is now a major lower low.

Internals are very bearish, the down breadth (participation) is extreme. Down volume is very large (*much* larger than up volume), and all accumulation/distribution indicators are showing decided and convincing distribution.

There will be rallies to be sure. And some of them will be impressive. But like I was pointing out before: What type of markets do 4% up days happen in? - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=389185, we get the most spectacular rallies as reactions within bear markets. And I now believe these peaks will be shorting, just as in opposition the last year and a half all the dips were bought.

I know nobody wants to listen to me. After all, I have been the "boy who cried 'bear'" for so long. But I have always maintained that this rally was nothing more than a very large bear market rally. And that eventually the bear market would resume. If anybody is interested, here is my updated Longer Term Projection - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=388503 that I provided a few weeks ago.

I woud encourage everybody to think defensively and to reduce risk exposure: A look at an old friend: Risk - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=392209. Good luck to all.

27 Comments – Post Your Own

#1) On May 25, 2010 at 11:36 AM, bothisellhigher (28.93) wrote:

I've been with you and your calls for quite a while, and I'm with you now.  I'm thinking that my next play is a long (say TNA looking for 44 points from $RUT 651 to 695) as the S&Pmarket puts in a little rally back to 1150 ish area and the $RUT puts in a little rally back to the 695 ish area...and then good night Irene...short (say TZA again.)  It appears that that is what your Longer Term Projection chart says as well...little rally in June, then a decline ending in late September ish.  Hey what?

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#2) On May 25, 2010 at 12:20 PM, binve (< 20) wrote:

bothisellhigher ,

Thanks man!

I agree, that is similar to what I am thinking. We might get a small bounce here. But I don't think we will get a large pullback until we test the 950-1000 area. I am not hard over on that projection, but it makes sense from a number of perspectives, both technical and sentiment. And I like the wave proportions a lot if that plays out. Thanks man!..

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#3) On May 25, 2010 at 1:08 PM, Tastylunch (29.20) wrote:

it does look very like it actually is "it" doesn't it?

oh man imagine if it  bounces back again. Then bears will really quit.:)

I'm still waiting for the 50/200 death cross before I pound it again.

It's a method that's worked well for me for years now. :)

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#4) On May 25, 2010 at 1:14 PM, binve (< 20) wrote:

Tastylunch ,

Hey Tasty!!

>>it does look very like it actually is "it" doesn't it?

Yes it does. And with the macro picture deteriorating, the macro-fundamentals and technicals look like they might be coming into alignment again finally.

>>oh man imagine if it  bounces back again. Then bears will really quit.:)

Actually my projection does call for a significant bounce back. It will not make new highs (if it does, then I am very wrong). But I think the major bounce will come from a bit lower down. And it's purpose, mainly, will be as a sentiment "reset" and burn off oversold so that the bear market can attack support levels with gusto. If the big wave is a big impulse down (which I think it is) then that is how it will likely behave.

>>I'm still waiting for the 50/200 death cross before I pound it again. It's a method that's worked well for me for years now. :)

I agree. A lot of people are waiting for that. So if (more like when IMO) that happens, we will see some huge selling pressure.

Thanks man!..

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#5) On May 25, 2010 at 1:17 PM, IIcx (< 20) wrote:

Thanks binve,

Since the Bears are back, my guess is, we'll head back up and then sideways for several weeks. The one thing the markets rarely do is to give traders a second chance.

Low multiple long plays are working nicely so far and I really like the shipping sector at these levels which is a lead indicator with rates improving.

Should be quite a wild ride. 

IIcx

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#6) On May 25, 2010 at 1:27 PM, binve (< 20) wrote:

IIcx,

>>Since the Bears are back, my guess is, we'll head back up and then sideways for several weeks. The one thing the markets rarely do is to give traders a second chance.

LOL! Touche :) It might play out exactly that way :)

>>Low multiple long plays are working nicely so far and I really like the shipping sector at these levels which is a lead indicator with rates improving.

Possible. I have a different take, but I definitely agree it is possible

>>Should be quite a wild ride.

We definitely agree there :) Thanks!..

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#7) On May 25, 2010 at 2:55 PM, outoffocus (22.86) wrote:

Wheres brickcityman when you need him?

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#8) On May 25, 2010 at 3:04 PM, binve (< 20) wrote:

outoffocus ,

:).

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#9) On May 25, 2010 at 3:57 PM, IIcx (< 20) wrote:

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#10) On May 25, 2010 at 4:14 PM, binve (< 20) wrote:

LOL! Thanks IIcx :)

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#11) On May 25, 2010 at 4:18 PM, Superdrol (97.31) wrote:

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=395669&t=01001545002054304245

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#12) On May 25, 2010 at 4:26 PM, binve (< 20) wrote:

Superdrol ,

Thanks, I do think we will get a bounce, just from a lower level. Here is my current wave count: Sloppy Joe

..

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#13) On May 25, 2010 at 4:45 PM, Superdrol (97.31) wrote:

Nice.  Do you trade for a firm or trade yourself ?  I bookmarked your website.  There's really good information on there.  I was thinking about setting up a trading blog website myself.  Right now I got this messy thing going on:

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=386753&t=01001545002054304245


I think longer-term it is up to Q2 earnings to push thru this year's highs.  Realistically I do not think it happens.  That is just my guess.  We get a push up into resistance in the S&P-500 to like 1,150 or so then we'll have to see.  I remember last year when a head and shoulders pattern got put in and broken so anything is possible.

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#14) On May 25, 2010 at 4:52 PM, binve (< 20) wrote:

Superdrol,

Nope, just trade myself. I like sharing my ideas and starting conversations. I am very much a macroeconomic guy, but I save this blog mostly for macroeconomic fundamental discussions (with a little TA thrown in) and my other blog for mostly TA (with a little macro thrown in).

>>I bookmarked your website.  There's really good information on there.

Thanks man!

>>There's really good information on there.  I was thinking about setting up a trading blog website myself.

If you do, let me know!

>>I think longer-term it is up to Q2 earnings to push thru this year's highs.  Realistically I do not think it happens.  That is just my guess.  We get a push up into resistance in the S&P-500 to like 1,150 or so then we'll have to see.  I remember last year when a head and shoulders pattern got put in and broken so anything is possible.

Definitely possible. I tend to think that the beginning of May marked a major top and the rest of the year we will trade lower. That's the way I am positioned at least. Nice bounce into July, but if my count is right, then it won't make higher highs. Thanks!..

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#15) On May 25, 2010 at 5:06 PM, EnigmaDude (94.22) wrote:

I read the post from GMX and got nervous, but then I read yours and it made me feel better - even you bears don't agree!  But I do agree that we will see mostly sideways movement for the next month or two while the market decides whether its a bull or a bear.  I won't be doing much buying but I will be watching closely for bargains.

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#16) On May 25, 2010 at 5:11 PM, binve (< 20) wrote:

EnigmaDude ,

>>I read the post from GMX and got nervous, but then I read yours and it made me feel better - even you bears don't agree!

LOL! That's true. But very few people agree with me at all. I am like an island. No, I am like a broken clock, or even worse a clock that is slowly moving out of phase with actual time. I am right even less than twice a day :)

>>But I do agree that we will see mostly sideways movement for the next month or two while the market decides whether its a bull or a bear.  I won't be doing much buying but I will be watching closely for bargains

Fair enough man. I know that we will never agree on being bullish vs. bearish but I do always appreciate you posts and insights. Thanks man :)..

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#17) On May 26, 2010 at 1:29 AM, Beorn10 (29.75) wrote:

Binve - To confirm your observation, I can just add:

When the new Bear Avatar Beom10 becomes an All-Star, we have officially entered a Bear Market - which was today! 

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#18) On May 26, 2010 at 8:41 AM, binve (< 20) wrote:

Beorn10,

Right on! :) Thanks :)..

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#19) On May 26, 2010 at 9:00 AM, panchocharlie (23.56) wrote:

binve, do your chart observations apply to the dow 30 industrials as well? thanks

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#20) On May 26, 2010 at 9:04 AM, binve (< 20) wrote:

panchocharlie ,

Yes they do. The &P 500, NYSE Composite, Dow Industrials broke the Feb lows and have the closes below the 200 day MA. The RUT and NASDAQ have not yet. ..

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#21) On May 26, 2010 at 9:07 AM, Superdrol (97.31) wrote:

technically the charts are still broken in a lot of sectors.  I think there is still a good argument for a bear market unless the S&P-500 breaks 1,150

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#22) On May 26, 2010 at 9:18 AM, binve (< 20) wrote:

Superdrol ,

Exactly man. If 1140-1150 gets recaptured then I will think twice. But until then this looks and quacks like a bear market. The burden of proof has now shifted to the bulls...

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#23) On May 26, 2010 at 11:22 AM, Superdrol (97.31) wrote:

euro going down, market going up.  someone is on the wrong side of the trade.

 

I think bears are putting more bullets in the revolver.......

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#24) On May 26, 2010 at 11:56 AM, IIcx (< 20) wrote:

If today acts as it did yesterday, markets will fall into the auctions and will rise at the end of the day. The markets this morning were a feeding frenzy, everything including the USD went up. Other then the VIX and 3x Bear ETFs of course.

I really doubt new shorts are in play until the market chooses a direction but I could be wrong. 

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#25) On May 26, 2010 at 12:37 PM, binve (< 20) wrote:

Superdrol,

Could be :)

IIcx ,

Maybe, I still think this is bearish: Uncanny. My $0.02. Thanks!..

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#26) On May 26, 2010 at 12:47 PM, IIcx (< 20) wrote:

: ) I follow your charts daily -- great stuff.

"Uncanny" -- retest of 1040 with a failure around 1040+ is likely but time will tell. Breaking out the popcorn ;)

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#27) On May 26, 2010 at 1:12 PM, binve (< 20) wrote:

IIcx,

Thanks man!..

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