Loading ...Major Sell Signals on All Indices; NYSE “Death Cross”
“We’ve been progressively more cautious and this month we became even more cautious…because we have major monthly sell signals in place for all of the indices… [H]istorically if we look back we got one of these monthly sell signals in January of 2008 and in June of 2000 so we tend to take them rather seriously. The next thing we are waiting for is a crossover of the monthly moving averages and we use a 10-month and a 20-month moving average, which would be a monthly death cross if you will. Everybody is talking about that…and the New York Stock Exchange just this week has been the first one to register that cross under of the 10-month moving average under the 20-month so that death cross is in place for one of the indices. I think that things are becoming much more fragile.”
Technical Bear Market
“There’s a good possibility that we see a 20% decline, which is defined as a bear market or slightly more than that. Whether it’s cyclical or structural has yet to be determined but for instance if the S&P, which is already down around 10%, were to come down another 10% you’d take it right back to 1600, which, ironically, is the breakout point through the 2000 and 2008 peaks, which was broken through on the upside in 2013. So a pullback to that breakout level would be a perfectly normal cyclical bear market in what presumably would be an ongoing bull market, just as we saw cyclical bear markets in the course of the 1982-2000 bull market.”
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