Friday, December 14, 2012

 

Do or die for the bear

 When I last posted on the stock market there was a pattern developing which lead me to believe we might be heading into a bear market.  So far the market hasn't confirmed that analysis one way or another.  What we do have are some very good points on the chart from which we can say for sure that the bear has begun or the bull market is still in tact.  First the bull, above 13,531 and the bull market is still raging probably taking out the 2007 highs.  (See the top line of the second chart.)



                    Long term trend

The bear market won't begin until we take out 11,889.  (This corresponds to 12,400 from my last post.  The futures contract changed from September to December and that is why price levels changed.  I could explain it but you wouldn't care.)  I am looking for the big bear, the bear that will take us down to the March, 2009 lows or lower.  That is why I am saying 11,889 has to be taken out.  There is a support level there plus the trend line for the entire bull move from 2009.

What's interesting is that the move off the high stopped near support (12,356) and since then we have a pretty clear up trend (see second chart) which is testing its up trend line.  A full confirmation of the end of that trend will come if we trade below 12,905.  That is an excellent point to get short for the a trade at least down to the beginning of this short term trend at 12,445 starting on 11/14.  And then the possibility of catching a much bigger move if the long term trend is broken at 12,356 then 11,889.



The best part of this is that you can take less risk based on trading the smaller trend with an ever increasing chance of catching a truly huge move as prices move in your direction.  It's do or die because there is very little room for the market to move in either direction without confirming bull or bear.







                   Short term trend

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