Just a MUCH NEEDED correction, or the start of a new BEAR?
Until we get a WEEKLY close below $2589.90 (30 week SMA) we have to operate under the assumption that we are still in a SECULAR BULL MARKET. We haven't even lost the 9M SMA or the 30 week SMA yet, so we can't call the bull dead yet. But, man did the last couple of weeks seem like a shot across the bow, or what? Maybe we should start thinking about what a cyclical bear might look like...
Yes, the BULL is old. It's tired. It needs to rest a bit. Yes, P/E's are high (the Corporate tax cut is so huge though, IMO.) The "E" side should get larger and stocks will appear cheaper as P/E's fall due to RISING EARNINGS.
IMO, Rising wages and lower taxes produce the GOOD kind of inflation, the kind caused by MORE COMMERCE. "One man's spending is another man's income", right? So, I'll stay with the SECULAR BULL case until the chart says not to. RSI closing the week below 50 doesn't exactly inspire a great deal of SHORT TERM confidence.
If we do get a weekly close below $2589.90, we will watch for a rejected test of the 30 week MA and start looking at a potential deeper correction to the $2409 area. I would want to be out of the market if we close below the 30W SMA and would become a lot more bearish in the SHORT TERM (A steep correction that tests the 200W EMA @ $2184, maybe?)
If we close a week below $2405-$2409, we are most likely headed to the $2175 area and into potential BEAR MARKET territory where people start talking about $1774...Maybe time to start buying the fear @ $2180-$2190ish (Wherever the 200W MA is at the time IF this scenario plays out.)
Lot's of speculation here, but what do you guys think? Deep correction, beginning of a CYCLICAL BEAR, or is this the end of the world?
I want to hear what you think! I'm here to learn, and share what I've learned in my almost 20 years watching and trading markets.
Yes, the BULL is old. It's tired. It needs to rest a bit. Yes, P/E's are high (the Corporate tax cut is so huge though, IMO.) The "E" side should get larger and stocks will appear cheaper as P/E's fall due to RISING EARNINGS.
IMO, Rising wages and lower taxes produce the GOOD kind of inflation, the kind caused by MORE COMMERCE. "One man's spending is another man's income", right? So, I'll stay with the SECULAR BULL case until the chart says not to. RSI closing the week below 50 doesn't exactly inspire a great deal of SHORT TERM confidence.
If we do get a weekly close below $2589.90, we will watch for a rejected test of the 30 week MA and start looking at a potential deeper correction to the $2409 area. I would want to be out of the market if we close below the 30W SMA and would become a lot more bearish in the SHORT TERM (A steep correction that tests the 200W EMA @ $2184, maybe?)
If we close a week below $2405-$2409, we are most likely headed to the $2175 area and into potential BEAR MARKET territory where people start talking about $1774...Maybe time to start buying the fear @ $2180-$2190ish (Wherever the 200W MA is at the time IF this scenario plays out.)
Lot's of speculation here, but what do you guys think? Deep correction, beginning of a CYCLICAL BEAR, or is this the end of the world?
I want to hear what you think! I'm here to learn, and share what I've learned in my almost 20 years watching and trading markets.
I was a buyer into the close on Friday, but I fully expect AT LEAST a re-test of the Feb lows. I am a long term Equity BULL, but please understand that if we close the week below $2568 (the 50 week EMA) that a test of the 200 week @ $2200-$2215 becomes increasingly likely. If we lose the 200 week, we've got REAL problems and a new BEAR MARKET.
Best of luck! The bull is tired, but the beat goes on. This time is NO DIFFERENT. Buy shares of stable, income producing assets, and avoid highly leveraged companies who are expected to need to raise capital to fund continuing operations.