Using my favorite chart for bear spotting, the 1W chart with Bollinger Bands, it is easy to find bears in sight below the BB median for for months. It is very rare that a month would pass with such a setting and the market doesn't turn bearish. It happened, though, recently with the COVID-19 lockdowns in March last year, and what we thought would be a bear turned out to be a raging ox. But what about the current downturn?
Using Fib retracements across different timeframes, I did a comparison between the bull market of this and last year and the one from 2015, after which a bear sustained almost a year. I picked this bull and not the one in 2018 since the 2015 one is similar in structure and magnitude to the last one. Moreover, I added a retracement to the whole bull market since 2015 to have a clearer historical context. The purpose for using Fib retracements was to analyze the apparently hidden support we are currently at, which proved to be resilient so far. The analysis shows tight support across different retracements of last year's bull, tighter than the support at the similar range in 2015, which was easily missed. This could partially explain the current resilience but it doesn't rule out a sustained bear this year. The analysis also show main level, which, judging from the history of 2016's bear, proved pivotal. For this year, the pivotal points are the current 16900 range, 15900, 14900, and 13600, the last of which would probably be the end of the bear, if sustained.
Fundamentals, of course, play a big role in the direction from the current level, and one of the biggest fundamentals is the global economy and its recovery. To see how tightly coupled the world economy is, you can add the
US30USD
. DowJones is more stable than both China30 and NSDQ100, and usually acts as moving average of sorts. Here, you can view the China30's bear of 2016 as a mere correction towards DJ's level. If that's true this time as well, then we are in the sustainable level for now and the namesake of the year could prove truthful.
Using Fib retracements across different timeframes, I did a comparison between the bull market of this and last year and the one from 2015, after which a bear sustained almost a year. I picked this bull and not the one in 2018 since the 2015 one is similar in structure and magnitude to the last one. Moreover, I added a retracement to the whole bull market since 2015 to have a clearer historical context. The purpose for using Fib retracements was to analyze the apparently hidden support we are currently at, which proved to be resilient so far. The analysis shows tight support across different retracements of last year's bull, tighter than the support at the similar range in 2015, which was easily missed. This could partially explain the current resilience but it doesn't rule out a sustained bear this year. The analysis also show main level, which, judging from the history of 2016's bear, proved pivotal. For this year, the pivotal points are the current 16900 range, 15900, 14900, and 13600, the last of which would probably be the end of the bear, if sustained.
Fundamentals, of course, play a big role in the direction from the current level, and one of the biggest fundamentals is the global economy and its recovery. To see how tightly coupled the world economy is, you can add the
US30USD
. DowJones is more stable than both China30 and NSDQ100, and usually acts as moving average of sorts. Here, you can view the China30's bear of 2016 as a mere correction towards DJ's level. If that's true this time as well, then we are in the sustainable level for now and the namesake of the year could prove truthful.