One of the fastest New Bear Markets, ever

[ornbudsman]

bull markets tend to go in three phases, early, mid and late, with a signifigant correction in between

bear markets in the first phase *tend* to erase the last phase of the bull market, before pausing and correcting with a rally to resistence, before resuming again with the second phase

S & P sawed off all the the rise since the mid 1998 top (last rise before the big 1998 correction) in the 2001 bear market

S & P sawed off all gains since mid 2006, the last big correction (that resulted in a resumed bull trend, ie continued higher highs), in fact friday it stopped EXACTLY at that level, but it got there much quicker than the last bear market

assuming that level holds tuesday

really scary stuff, technically

[masmdu]

1. Actually, Technically speaking...

I would expect at most a drop to 1275 before a retest of 1400 SPX ... then from there to 1210 with a possible extension to 1180 by April. That point will be long term rising trend line support from 1974 and the 50% retrace level (of the rise since '03). Simply watch the 24ema on the monthly for a cross of price above (confirmed by 13ema cross of 34ema on weekly) to signal the end of this correction.

I am scalling in between here and 1275 for a scorching rebound to 1400ish (above 1450 and it's game on bull!)

[ornbudsman]

3. broke 34 month ema

i like 14 moving average, 34 exponenetial moving average

on the monthly chart, once it broke the 34 month ema, it dropped like a little cessna in a stall (terrifying, if you've ever experienced it)

in the post 2003 bull, it never broke 34 month ema

[masmdu]

5. Also, consider DOW chart...

http://stockcharts.com/c-sc/sc?s=$INDU&p=M&st=1986-10-14&i=p30393682040&a=87051918&r=1209

As long as this holds and bases here the end of the world will have to wait.

Note: you may have to right click link ...copy link location...paste to browser address box...return...to view chart.

[masmdu]

7. and even here there is an over shoot leeway to 11700ish...n/m

.

[ornbudsman]

9. i calculate 11670

may 2006 high

'wave 3 high' in elliot wave parlance

(not a big believer in e wave, except for *past* big picture analysis)

S & P will be really important tuesday, as it already close right at the wave 3 high

bush stimulus package announced today could be excuse for bear wave one completion, initiating corrective wave rally

[masmdu]

11. True...we are very over sold here ... not far time/price away from move up. IMVHO

The designation of bear or bull is of interest but shorter term signals are where I do my fishing, making bull vs bear academic in my case.

[ornbudsman]

12. lower major low defines bear technically

and we just did it

oversold can become even more oversold

but i do believe we are at where a phase one would end, even if this is a terrible bear market

but, anything can happen, anything

there's always a 'twist'

[masmdu]

13. Yes, thats why we have stops. Good luck to you!

.

[ornbudsman]

8. good chart, thanks

[pa28]

10. Thanks, nice chart.

That base plus the fact things are oversold and over shorted you would normally expect a bounce.

Could get very interesting if the market decides to crack 12k though. Could be armies of angry 401k holders with pitchforks and torches going into the election.

[Warpy]

2. I keep wondering if the bears are out because of the campaign

Everybody knows damned full well that another GOP presidency that thinks tax cuts for the rich are a panacea will just about finish this country's economy off. I think the Wall Street boys are getting very nervous that the GOP might be picking up some steam while the Democrats look like they're not quite sure who they are or what they're supposed to be doing besides throwing poo at each other and trying to emulate Nixon's health care plan.

It's scary stuff no matter how you look at it. If a Democrat does get in, we'll have a deep recession. If another GOP gets in, it will be another Great Depression.

[ornbudsman]

4. not campaign related, IMO

it was all a house of cards in the first place

a 'recovery' based on artificial inflation of housing

surprised it held up this long, actually

[Warpy]

14. Well, same here

but the collapse of the housing bubble should only affect those institutions that invested heavily in CDOs that had been laundered into "investments" by hedge funds. Those would be brokerages, some banks, pension funds, and some cities and states.

The failure of the housing market bubble is just a slide. Trying to collect all that outstanding credit card debt will cause the avalanche.

I think the bears are out in force because they know the GOP doesn't have a clue in the world about what to do about a topheavy economy that threatens to collapse the consumer market.

[ornbudsman]

6. i honestly think it's not that much party related

even though i think bush is probably the worst president ever

fed is the real story, namely greenspan

greenspan over-did the rate hikes in early 2000, overcompensating for his prior over-liquifying in prep for y2k

we waited too long to take them back down, then panniced, taking rates way too low, knowingly creating a housing bubble

this cake has been baking for 5 years