Elliott Wave Analysis :: Robert Prechter

Since the July 9th BullBear Market Report, the US stock market has apparently completed an ABCDE ascending triangle pattern to complete the rally off the June low. This is being confirmed by a mounting body of technical evidence which strongly suggests we have either seen the top to the rally or that it is nearby. The Introduction to the last report still stands as a solid, sound interpretation of the current state of the markets:

In the June 17 issue of the BullBear Market Report, I presented detailed analysis showing that global risk asset markets are already 16 months into a bear market that started in the February-May 2011 time frame. I turned long term bearish on stocks and commodities On June 1, 2011 and turned intermediate term bullish on stocks at the October 2011 bottom. At that time I presented analysis supporting the thesis that US markets could very well make new highs, but that it would be an Elliott Wave "B Wave" high setting up a Major C Wave decline. In April 2012 I turned bearish again and called for the beginning of the main body of the bear market. We did get a decline through May and then a rally in June. A review of the technical market picture at this juncture still supports the conclusion that we are somewhere in a C wave decline and that the recent rally was a corrective move within that context.

New readers should note that my larger scale analysis is that US equities (and possibly global stocks as well) are in the midst of the final stage of a long term bear market that began in 2000. That bear market has taken the shape of a five wave ABCDE triangle formation and in my view the final leg of the E wave is in progress now. Further scrutiny of the overall conditions of this market reveals the possibility that the anticipated final low will come at a level substantially higher than the 2009 low and perhaps even higher than the 2011 bottom. We may see an end to this bear market that bears significant resemblance to the 1982 low that put an end to the 1966-1982 bear market. There also remains an outlier possibility for a 2008-like panic to lows beyond the March 2009 bottom. In either case, the right side of the market remains the bear side and it's not critical at this time that we know with certainty which outcome will prevail. As the current move unfolds, we will be able to evaluate the technicals to determine the appropriate time to cover shorts and turn around for the ensuing bull market.

While there does seem to be some chance that US markets could rally back to the April high for yet another B wave top, this possibility appears diminished at this time. The panic short covering rally related to the European Summit news appears to have exhausted buying power and reset many indicators from bearish overextended conditions. Shorts entered at these levels stand a fairly good chance of playing out well and there are rather clear, nearby price and technical conditions which will alert the trader that a run back at the highs is in progress. There does seem to be nearly total complacency on the part of the vast majority of market participants with a strong tendency towards an expectation that somehow, someway US equities will continue to levitate. The underlying technicals, as I have been detailing since February, say otherwise. The current technical setup bears striking, alarming resemblance to that which prevailed at the July 2011 highs and there are also some comparisons to the early stages of the 2007-2009 bear market. Having said that, there is some possibility that bears will be rather disappointed with the downside results on this leg, particularly if they are shorting US markets. While continuing to analyze SPX as a key guide to global market movements, it might be best to seek short side exposure in non-US equity markets in order to make the greatest gains during this next (and potentially final) bear wave.

I would slightly modify this outlook to include the possibility that the current bear phase that began in early 2011 is itself a five wave ABCDE triangle and that we are presently in the C leg down of that formation. This would allow for a panic bottom similar to the 2010 and 2011 episodes, followed by a D wave rally spurred by monetary action into a technically oversold market and then followed by a final E of E decline, thus ending the Bear market. This would certainly be the resolution that would serve to frustrate and whipsaw the maximum number of traders and investors, bullish and bearish alike, for the longest period of time (which as experienced traders know is the ultimate function of the market).

At this time there is far too great a bullish consensus on the part of active market participants to mark an end to the long term bear market. There is nothing even remotely approximating the psychology of fear and loathing found at the 1982 bottom at this time, but there certainly could be with one more good washout decline. Premature bulls would then exit the market in disgust, vowing never to return.

There's no doubt that in 1981 many bullish analysts were confronted with a similar set of circumstances and presented similar arguments such as we find today. They knew that stocks were hated, that the public was out, that the economy would eventually turn, that gloom and doom prevailed. They saw that P/E ratios had come down well off their highs and had even arguably fallen into territory that normally marked a buy point. Ultimately, they were proven right, but not before being wrong for over a year and 25%.

Then, just as now, there were bulls who were just as certain that a 25% decline could not happen and bears who were certain that a collapse similar to the period of the Great Depression was inevitable and unavoidable. The market found a way to prove both outlooks wrong. Based on my current analysis, I think we will see a similar resolution this time around as well.

This piece by Doug Short explains the trouble that many analysts are having when trying to factor P/E ratio and earnings into their market view. His chart of Cyclically Adjusted Price Earnings Ratio (CAPE) shows that while the ratio may be substantially lower at this time, it is not at lows which correlate with long term bear market buy points:

Using Robert Schiller's source chart, we can see that, as at the 1976 and 1981 highs, there is certainly room for a final E wave decline in the ratio:

I might also add that bulls are fond of citing "record earnings" as a justification for buying into the current market. That seems to buck common market wisdom. I would be leery of a strategy that calls for buying at a performance peak, particularly when that peak has come about primarily as a result of cost cutting rather than growth.

"Disasterist" ultra bears should be cautioned as well. While I think that the evidence for a significant drop from here far overwhelms any evidence for a significant rally, Uber Bears are also likely to be disappointed with the depth and severity of the decline. Worse, an inability to see the other side of the market will blind them to the ultimate bottom when and if it should arrive.

This interview with former Reagan Administration budget director is a compelling presentation of the Super Bear case:

http://youtu.be/jKprapaBXPo

http://www.marketoracle.co.uk/Article35689.html

Personally I favor his philosophical outlook and I would prefer to see his worldview proven correct and see the Keynsian Monetarist view proven wrong. But wasn't this argument made throughout the 1970's and early 80's? Haven't we been told that the fiat monetary system is "unsustainable" for over 40 years? Yet somehow, some way, the monetary magicians have been able to pull the proverbial rabbit out of the hat time and time again. My current sense is that once again, at the end of this cycle, the funny munny gang will have found some way of extending and pretending the scheme for another 4-5 years, much to the chagrin of the sound minded David Stockman's of the world. While it's certainly far too soon to make any firm projections in this direction, I see the potential for Dow 18,800 by 2017 which would then, finally, mark the top of the grand bull cycle that began in 1932. The piper will be paid, but the bill may not come due for another 5 years or so.

READ THE FULL REPORT HERE:

http://www.thebullbear.com/group/bullbeartradingservice/forum/topics/07-22-12-bullbear-market-report-next-bear-market-leg-beginning

===============================

Need some help staying on the right side of the markets? Join the BullBear Traders room at TheBullBear.com. You'll get this kind of timely, incisive, unbiased stock and financial market trading, timing, forecasting and investment technical analysis and commentary daily. It's free to join, no credit card is required and if you like my work you just make a donation at the end of each month.

Keeping You on the Right Side of the Market

PLEASE CONSIDER MAKING A DONATION TO SUPPORT MY WORK USING THE PAYPAL LINK BELOW. THANK YOU!

Make a One Time Donation

IMPORTANT UPDATE! "TECHNICALS CONFIRMING SIGNIFICANT BEAR MOVE BEGINNING" http://bit.ly/NL5oSs

"TECHNICALS CONFIRMING SIGNIFICANT BEAR MOVE BEGINNING"

Sunday, July 22, 2012

"07/22/12 BullBear Market Report: Next Bear Market Leg Beginning" http://bit.ly/NL5oSs

Friday, July 20, 2012

"POSSIBLE B WAVE TOP?A significant shorting opportunity may be near at hand." http://bit.ly/NCJgZ6

Monday, July 16, 2012

"MAJOR HIGH LIKELY IN NEXT 1-2 WEEKS" http://bit.ly/M3OLOG

Friday, July 13, 2012

"FAILED BREAK" http://bit.ly/OjivpF

Wednesday, July 11, 2012

"MASS MOVING AVERAGE CLUSTER BREAKS IMMINENT" http://bit.ly/PQRQI2

Tuesday, July 10, 2012

"TECH TECHNICALS SIGNAL BEARISH MOVE FOR MARKETS" http://bit.ly/N8L8K2

Sunday, July 8, 2012

"07/08/12 BullBear Market Report: 2011 Redux?" http://bit.ly/N8L8K2

Friday, July 6, 2012

"DO WE HAVE A TOP?" http://bit.ly/LCCMrm

Thursday, July 5, 2012

"SOME IMPORTANT OBSERVATIONS" http://bit.ly/PkEJOX

Thursday, June 28, 2012

"HIGH PROBABILITY OF NEXT WAVE BREAKDOWN" http://bit.ly/Mssxcs

Tuesday, June 19, 2012

06/17/12 BullBear Market Report: The Final Rally - BullBear Trading: Stock and Financial Market Technical Analysis http://www.thebullbear.com/group/bullbeartradingservice/forum/topics/06-17-12-bullbear-market-report-the-final-rally

Saturday, June 16, 2012

Value Line Geometic Index Predicts Major Stock Market Top

Here's the latest from Steven Vincent of TheBullBear.com:

Source link: http://www.thebullbear.com/profiles/blogs/value-line-geometic-index-predicts-major-stock-market-top

===================================

Value Line Geometic Index Predicts Major Stock Market Top

Last week I posted analysis showing that the monthly RSI divergence which formed at the 2011 and 2012 highs is a very reliable indicator of a stock market decline of almost 28% lasting 11 months. I continue to see many, many companion signals which confirm this.

The Value Line Geometric Index is showing a technical condition which has also been a strong indicator of major market tops.

The total number of companies in the Value Line Composite Index hovers near 1675, and is composed of the same companies as The Value Line Investment Survey®, excluding closed-end funds. The Value Line Composite Index has two forms, the Value Line Geometric Composite Index or the Value Line Arithmetic Composite Index...

Exchanges in The Value Line Composite Index are:

American Stock Exchange

NASDAQ

New York Stock Exchange

Toronto Stock Exchange

The Value Line Geometric Composite Index is the original index released, and launched on June 30, 1961. It is an equally weighted index using a geometric average.^[1] Because it is based on a geometric average the daily change is closest to the median stock price change.

The daily price change of the Value Line Geometric Composite Index is found by multiplying the ratio of each stock's closing price to its previous closing price, and raising that result to the reciprocal of the total number of stocks.

Value Line Composite Index

The Value Line Geometric registered a divergence from SPX and INDU at the 2011 and 2012 highs:

Also note the bear cross of the 50 EMA below the 200 EMA. We can also see a clear multi-year Head and Shoulders topping pattern which has also formed on NYSE and numerous other world stock, commodity and indicator charts:

Have there been other instances of this technical condition heralding a significant bear market?

In 2007, we saw a virtually identical setup:

Comparing the two charts you will find remarkable similarities. The moment of the bear EMA cross marks about the halfway point of the right shoulder and also marks a period of a small rally and some volatility.

In the period leading up to and involving the top in 2000, $XVG also diverged from SPX:

In this case, since the 200 top was the end to a multi-decade bull market, it took two years for the divergence to play out. There was something roughly akin to a Head and Shoulders formation involved as well.

In all three cases, major divergences and topping patterns formed over an extended period of time and clearly indicated a significant, underlying deterioration of market breadth leading to a major bear market. When taken in conjunction with the plethora of other similar data points that are present today, it would be wise for investors to consider the implications.

===============================

BullBear Trading

Keeping You on the Right Side of the Market

Friday, June 15, 2012

"BREADTH DETERIORATING RAPIDLY AS MARKET RALLIES" http://bit.ly/MbwOh8

Wednesday, June 13, 2012

"MULTI LEVEL HEAD AND SHOULDERS FRACTAL PATTERN SETS UP BIG GLOBAL DECLINE" http://bit.ly/MAY5Z3

Tuesday, June 12, 2012

"NASDAQ 100 SETUP" I'll be watching this to determine wheteher I need to cover or hold my position for further gains. http://bit.ly/MAY5Z3

Saturday, June 9, 2012

Bearish Monthly RSI Divergence 100% Accuracy Rate; Occurred at 91.6% of Stock Market Tops

href="http://www.thebullbear.com/profiles/blogs/stock-financial-market-crash">style="font-weight: bold; text-decoration: underline;">Bearish
Monthly RSI Divergence 100% Accuracy Rate; Occurred at 91.6%
of Stock Market Tops

Source link: href="Source%20link:%20%20http://www.thebullbear.com/profiles/blogs/stock-financial-market-crash">http://www.thebullbear.com/profiles/blogs/stock-financial-market-crash

Relative Strength Index is one of the most widely recognized and
followed technical indicators. The most common use of RSI is the
identification of divergences:

Developed J. Welles Wilder, the Relative Strength Index (RSI)
is a momentum oscillator that measures the speed and change of
price movements...According to Wilder, divergences signal a
potential reversal point because directional momentum does not
confirm price. A bullish divergence occurs when the underlying
security makes a lower low and RSI forms a higher low. RSI does
not confirm the lower low and this shows strengthening momentum.
A bearish divergence forms when the security records a higher
high and RSI forms a lower high. RSI does not confirm the new
high and this shows weakening momentum. href="http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:relative_strength_index_rsi"
target="_blank">StockCharts.com

The monthly chart of Dow Jones Industrial Average has registered
a bearish divergence at the 2011 and 2012 highs:

href="http://api.ning.com/files/ZPds95lVd797JpxBt3jGIuHSTHAzTomXDVty9CNgoHC1sdzTD4TmqRkCFY1Qv-0dlyNGWcR7e7M4AO6UKyWLvAEKUoH*yWVW/djiamorisdiverg.png"
target="_self">src="http://api.ning.com/files/ZPds95lVd797JpxBt3jGIuHSTHAzTomXDVty9CNgoHC1sdzTD4TmqRkCFY1Qv-0dlyNGWcR7e7M4AO6UKyWLvAEKUoH*yWVW/djiamorisdiverg.png?width=500"
class="align-full" width="500">

I went through the monthly data on INDU going back to 1971. In
100% of occurrences of the signal an average decline of 27.9%
lasting an average period of 10.8 months resulted. Since 1971 in
all 11 occurances of a bearish monthly RSI divergence a
significant decline of at least 16% followed. There was only one
top of significance that did not register this signal and that
occured in 1973. That means that during a forty year period
starting in 1971, 91.6% of all significant tops recorded this
technical signal. That is a period that encompasses two bear
markets and a major bull market as well, which means there is a
firm record of this technical condition resulting in serious bear
markets under a wide range of well identified market conditions.

Here's a list of the tops regsitering a monthly RSI divergence
and the subsequent percentage decline. Click on the link to see a
chart of the occurrence:

YEAR, PERCENT DECLINE, DURATION OF DIVERGENCE, MONTHS OF
DECLINE

href="http://api.ning.com/files/LbUhA-ARJgq2iPTcBVGizkZVXRg*pje0WSA7d8Fl1eARhrmnj5bkcUAxnANpqfwPhUWcnRIZZcspnochV5XqdrFpLckNA0bG/rsimo76.png"
target="_blank">1976, -28%, 5, 19

href="http://api.ning.com/files/ZPds95lVd7-MbCPraJnj*Oo5y56W8LQRzVySC15DtHrR04P8UrOzd0461uyCQ27OVeZNA7kztm3i4I2iqIiage3pIWD6gLXQ/rsimo80.png"
target="_blank">1980, -21%, 5, 2

href="http://api.ning.com/files/4hLA7iif3QWat-IFTytanOjVW7hEmBrcQKGPazaLbq8gM1s16PLFMFesMfuel5IPpeNLRUaua3mwIheg4Jn7ZtbIgStq22oB/rsimo81.png"
target="_blank">1981, -25%, 4, 17

href="http://api.ning.com/files/NWk7EHK2Fi9PAdD7s7dOalahkn8PYs5uSGqj*FzZKKOmj5c3NH1POYsszbiTG4e*Q2y19q7XW7qLnIEo9iWHBmwUNTEashD-/rsimo83.png"
target="_blank">1983, -17%, 6, 8

href="http://api.ning.com/files/41jVQ8sp5GUdIAdtPJEOhNyqbKYJBzqxQK9jJBeFoUIwPAlJyupsljsgSquphJlw-y0RRMVuujPVbuioY0xYyEtwgOZFFLAL/rsimo87.png"
target="_blank">1987, -41%, 16, 3

href="http://api.ning.com/files/*-R64zREQ0GLfvYrMRrEKcHGyeyx6uwDpcl4ng5xdVZu79yBR4LVga9bdhcq3iQA4-J8olAKYjOQkkbf0vhWrGyeFCttQvPC/rsimo90.png"
target="_blank">1990, -22%, 10, 4

href="http://api.ning.com/files/FoxXlW52UKSDNyzTaHVdxnp3eAWTyjcgzJWiuBWzkskH*y9jctnWGwQ0ejAPWAuJ6ySYP3pWX0l9N4i7go1o8GCUs8fya5Pc/rsimo97.png"
target="_blank">1997, -16%, 7, 3

href="http://api.ning.com/files/iQK6dPDq0cdc9Nx5k6dKhEb4CDfi9jyJbF*1cv2gcgn9MlU8tG2eJnwDRSrNUFZbzoky*4O1-XrMiBem*ETiROTvlItg5kUS/rsimo98.png"
target="_blank">1998, -16%, 11, 3

href="http://api.ning.com/files/6nTOrGbaHGwV4P3JFP459ZHlzzvtYBeU7igNb7hhZFgE24byi5lrqCjWXQ6-W8P5rUxVJXw2PFRw-slA6Ais8tbWXOl59PXT/rsimo2000.png"
target="_blank">2000, -39%, 8, 34

href="http://api.ning.com/files/ZPds95lVd7-lgGij-oMJCXTc54jW*I7BnqHISW6YdnGBc2bYZRRw355umQqBf0ZLMHVuuLQj85cqt4Ob0xDNv7blaethkMfI/rsimo2007.png"
target="_blank">2007, -54%, 4, 18

href="http://api.ning.com/files/*K5qtoHSaaGR6LDqK2wN-CWZ0X2VRkTDUG0aPJuanQQdGWPALBb2vZzAbRoiyLyHc4uC8Vzhhf54rBiamPuEFD9WJVrnKP6E/rsimo2012.png"
target="_blank">2012, -??%, 11, ??

The average percentage decline is 27.9%

The average duration of the bearish divergence (difference in
the number of months between each price top) is 7.91 months.

The average numbers of months of the decline is 10.8

The average monthly decline is 3.58%.

Removing the outliers of 54% and 16% the average percent
decline is 26.13%

Removing the outliers of a 16 month divergence in 1987 and a 4
month in 1981, the average duration of divergence is 7.4 months.

Removing the outliers of 34 months and 2 months, the average
length of decline is 7.5 months.

The current bearish monthly divergence took 11 months to develop,
about 3.5 months longer than average. This is the second longest
build to a bearish monthly RSI divergence, the first being the 16
month period leading up to the 1987 top and decline of 41%. The
current market is only 5 weeks off the divergent price top or 38
weeks short of the average and the maxium decline to date is about
9.8% or 18.1% less than the average drop. Altogether this suggests
the probability of considerable more downside in terms of time and
price yet to come in this bear market.

The average percentage retracement following a monthly RSI
divergence is 57.6%.

The nearest Fibonacci retracement percentage level of the prior
wave which it corrected for each signal is shown:

1976-1978
61.8%

href="http://api.ning.com:80/files/WaHBOOEbtoyhsVbXNfrsJjCYoG*ji2Mk-kYmOMVDSLmp3UtfnU7iQpfxEkSNGICwtxT6eYYH7TdZxItI24DcOhgQB4mH6Atw/Fib1976.png"
target="_self">src="http://api.ning.com:80/files/WaHBOOEbtoyhsVbXNfrsJjCYoG*ji2Mk-kYmOMVDSLmp3UtfnU7iQpfxEkSNGICwtxT6eYYH7TdZxItI24DcOhgQB4mH6Atw/Fib1976.png?width=500"
style="padding: 10px;" class="align-full" width="500">

1980 100%

href="http://api.ning.com:80/files/Rc829tkddiSbYMGmjNajlWUKJTR9KAHOLoygUrrzIKMiha0LQgWprod55pXaQkmfrGwsIsrzEpHlQ2ifniSqgk9V4yGPshNj/Fib1980.png"
target="_self">src="http://api.ning.com:80/files/Rc829tkddiSbYMGmjNajlWUKJTR9KAHOLoygUrrzIKMiha0LQgWprod55pXaQkmfrGwsIsrzEpHlQ2ifniSqgk9V4yGPshNj/Fib1980.png?width=500"
style="padding: 10px;" class="align-full" width="500">

1981-1982
78.6%

href="http://api.ning.com:80/files/8zWzi3z-1o9egsp8wH0EeldiErbAUDuJ5OU1DabTV4uPBqGoU3QejQ-METbvLR8zzLAs6x5ss*JQjcCMYAelJdIPTN23MKy-/Fib19811982.png"
target="_self">src="http://api.ning.com:80/files/8zWzi3z-1o9egsp8wH0EeldiErbAUDuJ5OU1DabTV4uPBqGoU3QejQ-METbvLR8zzLAs6x5ss*JQjcCMYAelJdIPTN23MKy-/Fib19811982.png?width=500"
style="padding: 10px;" class="align-full" width="500">

1983-1984
38.2%

href="http://api.ning.com:80/files/DynfYLhfgIx*IApU7AOzitcxklrgmcIuoTsPX8Npko43q09oloT4NxeB9Zk6mfzlK8g9ARPZCYo8SC10HwkwFYjRYwyVhdhU/Fib19831984.png"
target="_self">src="http://api.ning.com:80/files/DynfYLhfgIx*IApU7AOzitcxklrgmcIuoTsPX8Npko43q09oloT4NxeB9Zk6mfzlK8g9ARPZCYo8SC10HwkwFYjRYwyVhdhU/Fib19831984.png?width=500"
style="padding: 10px;" class="align-full" width="500">

1987 61.8%

href="http://api.ning.com:80/files/Y7NQOFl2UN80NLHUsDGloHNlbPtk88vxuKLi6yhoHDKMUEEmfjAcNcLE-eO7YaP76ox6d-8*bp2XiAEwHK1hfYY1N8QysJ*o/Fib1987.png"
target="_self">src="http://api.ning.com:80/files/Y7NQOFl2UN80NLHUsDGloHNlbPtk88vxuKLi6yhoHDKMUEEmfjAcNcLE-eO7YaP76ox6d-8*bp2XiAEwHK1hfYY1N8QysJ*o/Fib1987.png?width=500"
style="padding: 10px;" class="align-full" width="500">

1990 50.0%

href="http://api.ning.com:80/files/o0r1xd3GG*ny8Qil1ROA2rn1D2lB1MzM2U0Dz1TKT1X9*n*PS0ABSHjzLfzIEARrH-ZulEyRpd0wuobfl4kQdND9EaesG1Vh/Fib1990.png"
target="_self">src="http://api.ning.com:80/files/o0r1xd3GG*ny8Qil1ROA2rn1D2lB1MzM2U0Dz1TKT1X9*n*PS0ABSHjzLfzIEARrH-ZulEyRpd0wuobfl4kQdND9EaesG1Vh/Fib1990.png?width=500"
style="padding: 10px;" class="align-full" width="500">

1997 23.6%

href="http://api.ning.com:80/files/WaHBOOEbtoxLmcNubSzaolTFY21uAah*9mXuZ2wOmCq3IQ9Ie4ExiMHEDFEgJ2rSXgI2kb*26xKEX4Knl-Ne4Y8FCG-FrMVI/Fib1997.png"
target="_self">src="http://api.ning.com:80/files/WaHBOOEbtoxLmcNubSzaolTFY21uAah*9mXuZ2wOmCq3IQ9Ie4ExiMHEDFEgJ2rSXgI2kb*26xKEX4Knl-Ne4Y8FCG-FrMVI/Fib1997.png?width=500"
style="padding: 10px;" class="align-full" width="500">

1998 23.6%

href="http://api.ning.com:80/files/uDwW2UwPpmdm76Xcx8y35t79B6uz1G45jXCP*d8EaOPnMUZTonMMCMy*uKiRP-rKPoGwj*uQtUdyJ2WTRhzI6UHSH3iF-SL0/Fib1998.png"
target="_self">src="http://api.ning.com:80/files/uDwW2UwPpmdm76Xcx8y35t79B6uz1G45jXCP*d8EaOPnMUZTonMMCMy*uKiRP-rKPoGwj*uQtUdyJ2WTRhzI6UHSH3iF-SL0/Fib1998.png?width=500"
style="padding: 10px;" class="align-full" width="500">

2000-2003
38.2%

href="http://api.ning.com:80/files/5bE0uCUHNzvpZnyBtuakh*1Q-nxaexie2SyAhIw6WXUffEa5qFsU8MFxgwkOVYaJeNmUP66S7KH7Nzyw23152l8jt2KiTm*1/Fib20002003.png"
target="_self">src="http://api.ning.com:80/files/5bE0uCUHNzvpZnyBtuakh*1Q-nxaexie2SyAhIw6WXUffEa5qFsU8MFxgwkOVYaJeNmUP66S7KH7Nzyw23152l8jt2KiTm*1/Fib20002003.png?width=500"
style="padding: 10px;" class="align-full" width="500">

2007-2009
100%

href="http://api.ning.com:80/files/5bE0uCUHNztdqAQXXuHFPdj7A5sp5Z-36X*kY9FK01xPutTyRbdelBOtPYk*NWynmdN847thTQe5vttFt6xsoHklnV0wHzq7/Fib20072009100.png"
target="_self">src="http://api.ning.com:80/files/5bE0uCUHNztdqAQXXuHFPdj7A5sp5Z-36X*kY9FK01xPutTyRbdelBOtPYk*NWynmdN847thTQe5vttFt6xsoHklnV0wHzq7/Fib20072009100.png?width=500"
style="padding: 10px;" class="align-full" width="500">

If this occurance of the Monthly RSI Divergence results in an
average retracement it would entail a decline to Dow 9380 or a
drop of 26% from current levels and it would bottom in December of
2012 at about 9290.

href="http://api.ning.com:80/files/KetAQX8OVKbx9dj5GHbJmBqI*qGziIMEeTNkm3FLrDcjppNs7uZ75uxZq6AHHdvwWoVhmNNtgOArEcUxVe1X95raLGxDeodA/Fib2012.png"
target="_self">src="http://api.ning.com:80/files/KetAQX8OVKbx9dj5GHbJmBqI*qGziIMEeTNkm3FLrDcjppNs7uZ75uxZq6AHHdvwWoVhmNNtgOArEcUxVe1X95raLGxDeodA/Fib2012.png?width=500"
style="padding: 10px;" class="align-full" width="500">

The usefulness of this signal for identifying major tops which
result in an average bear markets of 27% is evident. On its own it
would be a powerful cause for investors to evaluate their market
position. Since it is accompanied by an extensive raft of other
strongly bearish technical indications, it should be taken as an
actionable signal.

While a short term, news driven bounce is likely, it should be
regarded as the last, best chance for investors to exit the market
before a major decline ensues. Front running the announcement of
"easing" by global monetary authorities may work for a period
ranging from a few days to a month or so but it is likely to be
punished severely in the end.

===============================

Need some help staying on the right
side of the markets? Join the href="http://www.thebullbear.com/group/bullbeartradingservice">BullBear

Traders room at TheBullBear.com.
You'll get this kind of timely, incisive, unbiased href="http://www.thebullbear.com/">stock and financial market
trading, timing, forecasting and href="http://www.thebullbear.com/">investment technical analysis
and commentary daily. It's free to join, no credit card is
required and if you like my work you just make a donation at the
end of each month.

href="http://api.ning.com/files/YXPKNxMJR7*N5xk*senvLh*SzETNU5HX49l0PiONj-NIivJ5Y1B0sv*43rSyI7Fp-NW*t*JqXlRY8pKzNZMX42W5Zxb7rOc1/BBTBanner2.png?width=925&height=142&xn_auth=no&type=png"
target="_self"> thebullbear.com src="http://api.ning.com/files/YXPKNxMJR7*N5xk*senvLh*SzETNU5HX49l0PiONj-NIivJ5Y1B0sv*43rSyI7Fp-NW*t*JqXlRY8pKzNZMX42W5Zxb7rOc1/BBTBanner2.png?width=925&height=142&xn_auth=no&type=png"
class="align-full" style="border: 0px solid; width: 500px;
height: 77px;">

Keeping You on the Right Side of the
Market

"Bearish Monthly RSI Divergence 100% Accuracy Rate; Occurred at 91.6% of Stock Market Tops" http://bit.ly/KWGAG1

Friday, June 8, 2012

"Murky, Herky, Jerky" http://bit.ly/NXlqGY

Wednesday, June 6, 2012

"IMPORTANT UPDATE: Countertrend Rally Possible Now" http://bit.ly/Kgbc0i

Tuesday, June 5, 2012

"HOLDING SHORT" http://bit.ly/K6Ko4w

Monday, June 4, 2012

"THE BAILOUT ZONE" http://bit.ly/K6Ko4w

Sunday, June 3, 2012

Global Financial Market Panic in Progress

Here's the latest from Steven Vincent of TheBullBear.com:

Source link: http://www.thebullbear.com/profiles/blogs/stock-financial-market-crash

Steven Vincent
BullBear Trading
http://www.TheBullBear.com

================================================

Global Financial Market Panic in Progress

"There is only one side to the stock market; not the bull side or the bear side, but the right side" --Jesse Livermore, Reminiscences of a Stock Operator

One year ago today I detailed to BullBear Traders members my reasons for turning long term bearish on global financial markets.

When I turned bullish in March of 2009 and again in September 2010, I put forward a set of criteria that could both explain the apparent bull market and potentially underly its perpetuation. Evaluating these criteria now I find that they are, at this time, unverified by market action. This, together with the technical action of the markets at their current state of development, forces a reevaluation of my market position.

My set of criteria for a continued bull market at this stage of the game:

Emergence of a leading economic growth sector, most likely Green/Clean Technology and other Tech

Leadership from BRIC and Emerging Market sectors

Re-initiation of currency carry trades, most likely Yen carry trade

Flight of capital from low yielding bonds to risk assets

Eventual, gradual broadening of participation in the bull market from professionals and institutions to the general investor population and eventually the general public.

Technical condition of the market remains healthy

At this time I am not seeing any of these criteria being met. Recently, most of the above were approaching or exceeding levels in keeping with a bullish view or were at least showing signs of moving in a bullish direction. But all have effectively reversed or aborted at this point. June 2011: Recognizing the Start of a Long Term Bear Market

I turned bullish for a countertrend rally at the bottom in October 2011. The following were posted as updates to 09/19/11 BullBear Market Report:

Reply by Steven Vincent on October 4, 2011 at 12:30pm

My current take is that the B of major B is over and we are starting C of B up:

From here we would get a five wave C wave to complete the major B wave pattern. Then the major C crash would begin.

===================

Reply by Steven Vincent on October 4, 2011 at 2:14pm

If my analysis is correct and the major B is NOT complete yet and there will be a rally to complete it, then it should retrace between 50% and 78.6% of the major A wave. Believe it or not, it could even go on to make a higher high! I don't think that it will, but its within the technical bounds of the setup. The fact that the first two legs of this B wave took so long and were so volatile tends to suggest the C of B could go higher than most think possible.

=============================

Reply by Steven Vincent on October 5, 2011 at 2:30pm

I would classify the C of B rally as an intermediate term rally, not short term. Like I said last week, it will probably go "higher than you think". It will have to convince many market participants that the decline is over and it will squeeze almost all the shorts out. And it will reset long term technical indicators to at least a neutral position.

This is exactly what happened. Some markets did rally to a higher high while most did not, convincing market participants that a new bull market was in progress. I waited for the long term technicals to reset from overextended bearish conditions and when I recognized that conditions had turned, I became bearish and started to short. Updates posted to 02/27/11 BullBear Market Report:

Reply by Steven Vincent on March 29, 2012 at 11:57am

WORLD FINANCIAL MARKETS HAVE TOPPED

DAX is showing a lower high and lower low after tapping its broken trendline from below:

The downtrend from the 2011 highs and the upper rail of the purple wedge were also tested at the high. A test of the 200 EMA on this A wave decline looks very likely.

EuroStoxx 50 has broken support and is below all its EMAs, which have started to roll over and turn down together:

I reviewed all world markets and I could post chart after chart after chart which shows similar bearish technical setups. While US markets may possibly rally back for one final minor B wave high before the main body of the C wave decline begins, essentially the B wave rally off the 2011 lows is very likely OVER.

================================

Reply by Steven Vincent on April 4, 2012 at 12:45pm

SIGNIFICANT DECLINE HAS BEGUN

There is now little doubt that a major decline has begun in world risk asset prices. An overall review of global markets including equities, commodities and bonds tends to support the thesis that a MAJOR C WAVEdecline has just begun. Whether the decline will take the shape of A-B-C (1-2-3-4-5) or C (1-2-3-4-5) is not yet clear. in either case yesterday was an ideal entry point for a short position. Rallies are selling opportunities from here forward.

I'm not sure I've ever seen such a glaringly obvious technical setup for a major reversal go so totally unrecognized by virtually the entire market. The one-sided psychology prevalent at this top virtually assures that it will be a swift and dramatic fall. While one could possibly construe some bullish notions if one were to restrict analysis to a box bounded by the charts of SPX, NDX, INDU and APPL, if you look at the rest of the world, commodities and the technical indicators it is virtually impossible to stay bullish on global asset prices. In fact one must conclude that yet another massive deflationary bust is right around the corner.

================================

Since then I have been pounding the table and expounding the evidence supporting a near term major market top and crash to little avail. My efforts have largely been greeted with silence and even scorn. I've taken this reaction as a kind of contrarian confirmation that I'm on the right track. It's important for new readers to know that I am not a permabear. While I turned appropriately bearish in April 2010 and May 2011, I had been bullish since February 2009. As of this writing my analysis is that the currently unfolding crash will end the bear market that started in 2000 (though I reserve the right to revise that as the markets develop) and that at that time a major long term buying opportunity may present itself.

I'm a BullBear. I maintain an awareness of both sides of the market at all times. If I could find any evidence that supports a bullish market positon on any time frame in any risk asset market, I would present it to you. Well, I have looked and I continue to look and my finding is the following: there isn't any.

First let me address the general psychology and methodology embedded in the current bull argument. A great many of the bull proponents were former bears who have been turned over the course of the rally from the October 2011 lows. Once having been turned they are finding it very difficult to entertain any bearish evidence and are instead actively cherry picking data points that support their view. There is a total loss of objectivity and a mental clinging to erroneous views that are proven erroneous every day by market price action. Bulls, many of whom once claimed to know better than to trust this corrupted market, have been suckered and they can't bring themselves to admit it. This is of course the function and purpose of the B wave rally and it has accomplished its ends admirably.

The bear case, which will be exhaustively detailed in this report, has the support of factual, extensive, clear and overwhelming technical, sentiment, psychological and--now increasingly--fundamental evidence. The bull case relies upon the following:

Market is in an uptrend

Stocks are cheap

Bond investors are stupid

There's too much bearishness

Market is oversold

The Fed will bail us out

I'll start this report by conclusively refuting each of these points:

There are no uptrends of any kind on any time frame; global risk asset markets topped in early 2011 and have been in a bear market since then

Readily available data shows stocks are at best only relatively cheap and the 1966-1982 bear market shows they can get even cheaper

Bond market is not an effective sentiment/psychology indicator and the "dumb money" paradigm does not work

There's very little actual bearishness in the current market

The market is UNDERSOLD

The Fed's last efforts failed miserably, it's next effort won't work at all and it's not in a position to even try at this time

CONTINUE READING THE FULL REPORT:

http://www.thebullbear.com/group/bullbeartradingservice/forum/topics/financialmarketpanic

Need some help staying on the right side of the markets? Join the  BullBear Traders room at  TheBullBear.com. You'll get this kind of timely, incisive, unbiased  stock and financial market trading, timing, forecasting and  investment technical analysis and commentary daily. It's free to join, no credit card is required and if you like my work you just make a donation at the end of each month. 

Keeping You on the Right Side of the Market 

06/03/11 BullBear Market Report: Global Financial Market Panic in Progress http://bit.ly/K6Ko4w

Friday, June 1, 2012

"IT AIN'T OVER TILL ITS OVER" http://bit.ly/Kilkfh

Tuesday, May 29, 2012

"NEXT LEG DOWN?" http://bit.ly/KpXJqV

Wednesday, May 23, 2012

"COMPETING SCENARIOS" http://bit.ly/JIEPwL

"LOWER LOWS" http://bit.ly/Lg6gtd

Tuesday, May 22, 2012

"NEXT WAVE DOWN IN CRASH MAY BE STARTING NOW" http://bit.ly/JbcNVl

"IS $TED STARTING TO MAKE ITS MOVE?" http://bit.ly/JaUpvW

"LAST CHANCE TO EXIT LONGS" http://bit.ly/JaDrOj

Monday, May 21, 2012

"IS TODAY AUGUST 3, 2011?" http://bit.ly/KfyCq8

Sunday, May 20, 2012

"BULLS ATTEMPT RALLY" http://bit.ly/J7Abmx

Thursday, May 17, 2012

Facebook IPO May Break the Market and Initiate a Free Fall Crash

Let me start by clarifying something. I am not saying that the market could crash spectacularly in the next few days and that in that event the Facebook IPO would be a major contributing factor. I am not saying that. The market is saying it.

Facebook boosts IPO size by 25 percent, could top $16 billion

NEW YORK/SAN FRANCISCO (Reuters) - Facebook Inc increased the size of its initial public offering by almost 25 percent, and could raise as much as $16 billion as strong investor demand for a share of the No.1 social network trumps debate about its long-term potential to make money.

Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, said on Wednesday it will add about 84 million shares to its IPO, floating about 421 million shares in an offering expected to be priced on Thursday. http://finance.yahoo.com/news/facebook-expands-ipo-size-aims-011714...

This mammoth dumping of shares onto the market is coming at the exact moment that global financial markets are teetering on the brink of disaster. Technically and psychologically this market is as weak and poorly positioned to absorb a new float of this size as it could possibly be. As every market across all asset classes breaks majorl bearish technical levels, as the fundamental news flow accelerates and worsens by the hour, Wall Street if fixated upon "the biggest IPO ever". Few ask why Facebook owners are rushing for the exits now. Few observe that the markets began their current crash on the day of the Carlyle IPO. Even few wonder what the potential effect will be of sucking the remaining air out of the room even as the markets gasp for breath.

Bulls will presently argue that the market is very oversold and positioned to rally. Under conditions of a healthy bull market, they would be correct. Every indicator you could think of is positioned for a rally in the context of a real bull. The trouble is that the last bull phase ended in February of 2011 and the market has been falling apart internally for over a year. In fact, technical deterioration has run far ahead of of price declines in much the same way in 2011. The result then, as now, is that market price sprints to catch up to the technicals and the result is a crash.

Here's just one example of many. Prior to the 2011 crash, the ratio between Down Volume and Up Volume began to expand dramatically even as the market made new highs, creating a divergence between market price and the indicator:

Take note that if this pattern repeats itself for a fourth time (and there are many compelling reasons to think it will as we will see later in this posting), then we are yet very early in the process. This suggests that although we could be considered "oversold" at this time, a market crash is pending. And it is important to further note that serious market crashes come from deeply oversold, deteriorated technical conditions such as those prevailing right now. When comparing 2011 and 2012 levels, the indicator also made a higher low while the market made a higher high which is a divergence.

The ratio between Advancing and Declining issus is set up very similarly and is also highly suggestive of a pending crash with a breakout move just beginning:

This indicator also created a divergence at the 2011 and 2012 price highs. Keep in mind that both of these indicators are just now beginning their big moves.

One of the hallmarks of a crash is a rapid expanison of New 52 Week Lows:

Note the huge divergence between 2011 and 2012 as more New Lows were being registered at a higher price level in 2012. Also notice the rapid expansion of New Lows as price breaks the neckline of Head and Shoulders tops in both 2011 and 2012.

Many will argue that the price of the 30 Year Treasury Bond is "too high" and that the recent flight of capital to the perceived safety of that market is "irrational" or even "stupid" and that it "must reverse". Right now, the long bond is blasting through the upper resistance band that has contained it for several decades:

Note that this very long term breakout move is coming after a six month long consolidation. Also note that this is the first time ever that this market did not return to support after visiting its upper resistance band. Traders should respect the intelligence of the market. Clearly it is saying that there is a real need for safety and that the need is so urgent tha a multi-decade technical level needs to be completely taken out. Also note that this breakout move is only just beginning.

The ratio of SPX to the 30 Year Treasury Bond has very recently plunged through its multi decade uptrend while simultaneously violating its 20, 50 and 200 monthe exponential moving averages:

Clearly this is a move that is only just beginning. When such long term technical events occur is far more likely to mark the onset of something rather than the end of something. The presence of a clear Head and Shoulders formation suggests an immediate crash to the neckline and beyond.

The Dollar ETF, UUP, is rapidly approaching the neckline of a clear reverse Head and Shoulders formation:

This is coincident with a triple bull moving average cross. The bull cross together with a breakout from the formation neckline would be the beginning of a very strong move.

Volatility Index has broken out from a six month long inverse Head and Shoulders pattern and has closed four consecutive sessions aboove its 200 EMA:

This is the beginning of a very large move for VIX, which can only correlate with a significant bearish event for stocks.

I could post many more charts which show that the market is far nearer to the beginning of a major event than to an sort of end. Oversold is likely to become much more oversold as panic selling takes hold.

While we could argue that RSI is now well below 30 and therefore oversold, historical precedent shows that it can go much lower:

The incidents when RSI started at 70 and went below led to an average bottom for the indiator of 16. My take is we will see that reading on this decline and it will reflect a serious bearish market event.

In this context, Wall Street will be dumping an enormous new float of a new "darling" stock into the market on Friday. Market participants still largely regard the recent price decline as a buying opportunity and the expectation is that the FB shares will be "snapped up" by eager investors. Recent dip buying behavior has only served to expend what little available cash there is in the market. The Facebook IPO will suck the remaining air out of the room, leaving a vacuum. While the effect may not be immediate, it could take only a few sessions for the real selling to begin. The setup for a Black Monday is there. And I do not mean that metaphorically.

I will leave you with the following chart study comparing the period immediately prior to the Friday before Black Monday 1987 and the period leading up to today, Friday, May 18, 2012:

Day by day, tick by tick, technical event by technical event, the two charts are nearly perfect replicas. Will the fractal echo complete on Friday and Monday?

Any long position under these circumstances is sheer folly. And I'm not saying that. The market is saying it.

Facebook IPO May Break the Market and Initiate a Free Fall Crash

"Facebook IPO May Break the Market and Initiate a Free Fall Crash" http://bit.ly/KmVxxa

"CRASH SCENARIO IN PLAY RIGHT NOW" http://bit.ly/LaFv8P

Wednesday, May 16, 2012

FACEBOOK FLOAT WILL LIKELY CRASH THE MARKET

"FACEBOOK FLOAT WILL LIKELY CRASH THE MARKET" http://bit.ly/Jw8nOI

Monday, May 14, 2012

Bullish Consensus Creates High Risk of Potential Near Term Global Financial Market Crash

Here's the latest from Steven Vincent of TheBullBear.com.

Source article: http://www.thebullbear.com/profiles/blogs/bullish-consensus-potentially-setting-up-a-near-term-global-finan

================================================

Bullish Consensus Creates High Risk of Potential Near Term Global Financial Market Crash

High Risk of Near Term Global Financial Market Crash

At each juncture, I look at the available information as represented in the market price and technical data. I approach the body of evidence without preconception and with an open "beginner's mind". I see what I see. I analyze. I develop a set of probabilistic outcomes and then rank them. Then I write my report. I simply report my findings.

There is an extraordinarily high risk of some variety of global market panic in the relatively near term. In fact, I would say that there is a extant setup that is as perfectly aligned for an extreme market event as could be dreamed of by the most bearish of permabears. I'm no permabear, but a thorough review of the current price and technical charts has revealed an inordinate confluence of data points which collaborate to represent a very high risk profile. The current extreme risk profile is amplified by a nearly total lack of recognition on the part of market participants. A deflationary episode, potentially on the scale of the 2008 event, is presently on the table. Investors would do well to at least consider the facts, analysis and conclusions of this report.

(NOTE: Click the charts to see the full size images)

BULLISH CONSENSUS

I generally place Sentiment and Psychology at the bottom layers of my analysis since it it the softest and least reliable data to consider, but in this case I am going to lead with it simply because there appears to be not merely a significant gap between perception and reality but apparently a widening chasm. Bulls are repeatedly citing "excessive" or "extreme" Bearishness as a primary basis for an ongoing Bullish outlook, but the evidence strongly suggests this is not only not warranted but that the exact opposite conditions prevail.

There appears to be nearly total complacency in the present market environment. Few if any analysts are currently willing to consider a market top of any kind, much less a crash. Based on the findings in my current BullBear Market Report, the continued bold bullishness of the overwhelming majority is simply not supported by the technicals of the market.

Of late many Bulls are citing American Association of Individual Investors poll data which they view as proof positive of extreme bearishness in the market. First, let it be said that this data is soft and its interpretation is highly subjective and as such it is rarely useful and its best use comes when one side of the market is leaning heavily on its perception of the data to justify its market position.

Let's have a look at the current AAII data. Theoretically, a reading of 25% bulls and 43% bears tells us that most individual investors are bearishly aligned and therefore out of the market or short, setting up a bullish resolution. Let's backtest that a little:

In late May of 2011 there was a reading that exceeded the current poll. While it did mark a short term bottom and a sharp rally ensued (and the current setup could be similar), it was very brief and was immediately followed by a market crash. At the 2007 top, there were multiple readings which exceeded the current poll and yet that turned out to be a spectacularly good time to be Bearish. In 2008, just before the main leg of the crash, there were readings which exceeded the current poll and yet that was certainly a time when the smart money was Bearish. It only took a glance at the actual data to discover that drawing a long term Bullish conclusion from a single week's AAII polling data is entirely unsupported by the facts.

One might also want to look and see if there is some supporting, corroborative data. I did, and there isn't any. In fact, the exact opposite appears to be true. Other similar sentiment data appears to suggest excessive Bullishness in the market at this juncture.

Investor's Intelligence Bull/Bear ratio remains relatively high with a slight increase in Bulls and a sharp drop in Bears to very low levels:

In addition, the percent of II respondents calling for a Correction has surged to a 12 year high as the percent who are Bearish has dropped to levels seen at the 2007, 2010 and 2011 tops:

In this context those calling for a Correction are in fact long term Bulls who are looking to buy this dip. For the contrarian, this can be interpreted as a strongly Bearish setup.

National Association of Active Investment Managers poll surged to over 60% bulls last week and increased yet again this week:

Consensus Inc survey is certainly in the sell zone:

Market Vane is at levels far more correlated with significant tops than bottoms:

Hulbert Stock Sentiment is closer to its Bull extreme than its Bearish extreme:

Now let me be clear. I am not basing my Bearish market view on this sentiment data. I am merely pointing out that, contrary to current popular perception, sentiment polling data supports a Bearish rather than a Bullish view.

A survey of the financial news media and popular blog sites also reveals very little in the way of bearish psychology. Few if any are calling a top of significance while some grudgingly admit the possibility of a "pullback" or "correction".

BEARISH ASSET ALLOCATION, LOW CASH

A little more digging into the AAII data shows that the same investors who are supposedly "extremely bearish" have allocated assets in a pattern that closely resembles that which has been found at important tops:

Stock allocation is at the same levels found immediately preceding the 2008, 2010 and 2011 crashes and only slightly below levels found immediately preceding the 2001 and 2002 crashes. Investors were similarly allocated to bonds just prior to the 2010 and 2011 declines. Cash allocation is identical to that found at the 2007, 2010 and 2011 tops and only slightly higher than that found at the 2000 top.

Rydex fund asset distribution data corroborates the AAII data:

Available cash in Money Market funds is nearly at a 3 year low. Rydex Bull fund allocation is hovering near the highs while Bear fund allocation is at the lows. Total assets in all Rydex funds is falling as money exits the markets.

Rydex asset ratio also corroborates the AAII data. It has surged to the bullish side recently to levels above the 2011 highs and is at levels far above those found at the 2007 and 2010 tops:

It appears that market participants have clearly chosen to view the recent decline as a buying opportunity and show no sign of fearing a significant bearish turn in the markets. This smacks of late bulls desperately seeking an entry point at the top of the market, trying to make up for having missed the big run. In light of the technical analysis I present in the current BullBear Market Report, this behavior may represent a dangerous misalignment with reality.

Much ado is currently being made of equity Mutual Fund outflows and Bond fund inflows. In my view the evaporation of public interest in stocks in the current environment is not bullish. Bulls argue that this means that the public is not invested and therefore represents latent buying power on the sidelines. While this may be true in the context of a healthy bull market, we will see later in this report that this market is not technically sound. In this context the flight of public capital from the markets represents a dearth of available cash, not a surplus:

Mutual Fund cash is at all time lows.

The available cash sitting on the sidelines in money market funds ready to be deployed is near record lows:

In the context of a bullish consensus coupled with a technically weak market, this is a very dangerous situation. Any unexpected market dislocation could result is a free fall with little in the way of sideline cash to stop the fall.

The 200 EMA of Total Market Volume peaked on the first decline of the 2007 bear market:

It has been declining steadily since then. Declining volume during the 2007-2009 bear market was not Bullish.

Even downside volume slipped during the 2007-2009 decline:

Upside volume is now at levels seen in 1997:

How does the behavior of market volume during the current Bear market compare and contrast with prior bear markets?

As we can see, volume on the Dow has fallen off a cliff since 2007 and since 2009 volume has come in well below the 50 Quarter EMA. Volume declined in every quarter sequentially except in the down quarters during major market pullbacks in 2010 and 2011.

During the 1966-1982 bear market, volume stayed well above the 50 Quarter EMA and even managed to expand during the course of the Bear, with periods of higher volume during Bullish phases and lower volume during Bearish phases, the opposite of what we have seen during our current market. As the Bear neared its end and began to enter a new Bull, market volume began to expand dramatically, doubling as the Bull began its run. That's the opposite of the behavior we have seen in the present market. It's well known that the public fled the markets during this period, much as they have during the current phase, and famously the "Death of Equities" was declared. A dramatic drop in public participation was bearish then, until the bear market ended on expanding volume.

During the 1929-1932 Bear market, volume fell dramatically during the Bear as investors fled the market. During the early stages of the new Bull, volume in excess of the 50 Quarter EMA came almost exclusively during big rallies and Bullish phases with very low volume during Bearish phases. Again, this is quite distinct from the behavior we are seeing in the present market.

Historical precedent does not support the thesis that low volume and investor flight is a sign or condition of a nascent Bull market.

CONCLUSIONS

The current sentiment and psychology of the market, when taken together with the rigorous and thourough technical analysis provided in the latest BullBear Market Report, shows that there is simply no question whatsoever that the overwhelming weight of evidence indicates a strong potential for a near term crash of world financial markets. Certainly, there are many times when latent potential is not realized and there is a valid setup for a near term rally as well. But in an environment of psychological and emotional complacency the probabilities become heavily skewed towards a realized bearish outcome. Global financial markets are currently in a bona fide crash window and panic events similar to the 1987, 2008, 2010 or 2011 episodes are all very real possibilities.

There's an elephant in the room and no one wants to acknowledge it.

Go here to read the full BullBear Market Report:

http://www.thebullbear.com/group/bullbeartradingservice/forum/topics/05-06-12-bullbear-market-report

Keeping You on the Right Side of the Market

Friday, December 21, 2012

Thursday, December 20, 2012

Wednesday, December 19, 2012

Monday, December 17, 2012

Friday, December 14, 2012

Thursday, December 13, 2012

Wednesday, December 12, 2012

Friday, December 7, 2012

Wednesday, November 28, 2012

Saturday, November 24, 2012

Thursday, November 15, 2012

Wednesday, November 14, 2012

Tuesday, November 13, 2012

Monday, November 12, 2012

Wednesday, November 7, 2012

Thursday, November 1, 2012

Wednesday, October 31, 2012

Thursday, October 25, 2012

Wednesday, October 24, 2012

Tuesday, October 23, 2012

Monday, October 22, 2012

Friday, October 19, 2012

Thursday, October 18, 2012

Wednesday, October 17, 2012

Tuesday, October 16, 2012

Monday, October 15, 2012

Friday, October 12, 2012

Wednesday, October 10, 2012

Tuesday, October 9, 2012

Friday, October 5, 2012

Thursday, October 4, 2012

Wednesday, October 3, 2012

Monday, October 1, 2012

Friday, September 28, 2012

Thursday, September 27, 2012

Wednesday, September 26, 2012

Tuesday, September 25, 2012

Monday, September 24, 2012

Wednesday, September 19, 2012

Tuesday, September 18, 2012

Monday, September 17, 2012

Friday, September 14, 2012

Wednesday, September 12, 2012

Monday, September 10, 2012

Friday, September 7, 2012

Thursday, September 6, 2012

Tuesday, September 4, 2012

Thursday, August 30, 2012

Tuesday, August 28, 2012

Monday, August 27, 2012

Thursday, August 23, 2012

Wednesday, August 22, 2012

Monday, August 20, 2012

Thursday, August 16, 2012

Tuesday, August 14, 2012

Wednesday, August 8, 2012

Tuesday, August 7, 2012

Monday, August 6, 2012

Friday, August 3, 2012

Thursday, August 2, 2012

Wednesday, August 1, 2012

Tuesday, July 31, 2012

Friday, July 27, 2012

Thursday, July 26, 2012

Wednesday, July 25, 2012

Tuesday, July 24, 2012

Sunday, July 22, 2012

Friday, July 20, 2012

Wednesday, July 18, 2012

Monday, July 16, 2012

Friday, July 13, 2012

Wednesday, July 11, 2012

Tuesday, July 10, 2012