The beginning of a bear market ?

[Stocky2000]

look at IBM the chart is really damaged the rally yesterday is good for a short setup soon with a low risk stop

[Stocky2000]

Bear Market Risk
By Colin Twiggs
December 1, 3:30 a.m. ET (7:30 p.m. AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use.

USA
Dow Jones Industrial Average
The Dow Jones Industrial Average signaled a bear market, according to classic Dow Theory, when it penetrated primary support at 12800. Fundamental supporting evidence includes:

A negative yield curve in 2006/2007
The Fed cutting the fed funds rate
The widening spread between T-Bill yields and rates in the $2 trillion commercial paper market
Projections that the housing collapse will last well into 2008
Technical signals include:
The Dow is below its long-term trend channel, indicating a loss of momentum
Twiggs Money Flow continues to display a large bearish divergence, warning of a reversal
Fedex, often a lead indicator for the economy, broke through long-term support at $100
Dow Jones Transport index is in a primary down-trend
Arguments against:
A sharp reversal above 12800
Reasonable third quarter earnings — outside of the financial and housing sectors
A reasonable price earnings ratio of 18, indicating that the bull market has not reached stage 3.
Present activity resembles a market top, with uncertain investors dashing back and forth — and large volumes changing hands, but no real direction. The financial sector faces a searching examination in the months ahead and I would estimate that the odds remain 3 to 1 in favor of a bear market. The probability of a further primary advance, signaled by a rise above 14000, would by contrast, be 1 in 4.

[Stocky2000]

  two bearish example what may come with other indexes = a breakdown

[Stocky2000]

deadcross coming MA 50 goes thr. MA 200 and we closed under the MA 200 very bad. Good for the bears. This week the fed s work didtn help anymore not like in august...the bulls are running to the exit....

looks very bearish to mee.....left shoulder and head and now we are on the right shoulder....get some short in your portfolio! 

[la-onda]

fyi:

Dennis Slothhowers market view

Dear Friend,
It looks like we are seeing the beginning of a recession taking place.
I have to tip my hat to the bulls; they are doing a remarkable job trying to defend primary support. I don't know how long they can hold given a plunging housing market, soaring crude oil prices and a worsening credit crunch. No one really can tell how this will all pan out for the rest of the year. That is why I employ a well-defined plan of action. That has always been my plan for protecting principal and making profits, and I hope it is yours too. Now more than ever, considering the difficult market environment we are in. There will come a time when I will flash the all-clear sign and then I want you to back the truck up and buy with both hands. But for now, patience continues to be a virtue.

THE VIEW FROM MY SEAT
* The stock market's technical underpinnings continue to deteriorate as market breadth is weak.

* The bear market in the U.S. dollar is picking up where it left off. Further rate cuts to counter recessionary conditions may be unavoidable.

* Crude oil and gold are testing new all-time highs; however, commodity stocks are vulnerable to a falling stock market.

* The Dow Jones World Stock Index is forming a massive head-and-shoulder formation, a precursor to a bear market. When the bear comes to eat, there will be no place to hide.

I am not going to paint a rosy picture for the U.S. economy for 2008.
You're much smarter than that and can see for yourself what is happening in
the markets. Even former Federal Reserve Chairman Alan Greenspan is forecasting
a high chance of a recession this year. Many noted economists are calling for a recession this year as a result of the subprime fallout led by Wall  Street's bankers and brokers.
Given this pitiful backdrop, I am amazed that the stock market's primary
trend is still intact. Given all the obstacles the bulls have been facing over the past twelve months, especially crude oil knocking on the $100-a-barrel level, my charts still show the primary trend holding above its middle Bollinger Band lines for the S&P 500 benchmark (1419),and the 50-day exponential moving average (EMA) still above its 200-day EMA. That is why, technically, we are still in a bull market.

Why the heck is the market holding on to this bullish uptrend and not falling off a cliff? From all my research I have to conclude that the stock market has not crashed because it is being supported by the global central banks. They are joining forces and are desperately trying to prevent a global economic contraction. Ok, I will name names if that makes it clearer for you. Countries like China and Saudi Arabia, which have their currencies pegged to the dollar, are flush with liquidity and are either directly or indirectly investing in US large cap diversified companies. By the way, that is also why the S&P 500 benchmark has been able to stay above its primary support lines. I have to be honest with you; my crystal ball has been in the shop the past few weeks so I can't tell you how this year will end and what will happen in the stock market. But I can share with you a piece of advice that has always worked for me. If there was ever a time when you needed a well-defined plan of action, it is now. You need to have a
plan and know beforehand exactly what you should do to protect your assets and profit in this market. I am not content with just surviving but must thrive. If you follow the plan, I am confident you will have a happy year. You will need to be on your toes and attentive, disciplined and active, willing to play both sides of the market when I tell you to. Your trading skills will need to be tactical and as sharp as a razor, especially if the bulls lose control of the primary trend, which they are on the verge of doing. Because the way I see it, chart patterns are showing that the major indexes are forming a massive head-and- shoulder formation. This means in simple English that the risk of a downturn is very high.

2008 Action Plan
Here is my action plan for 2008: I hope you make it your own. I will be looking for trading opportunities in which the odds are greatly in my favor. I only want to trade in the sweet spot: the time when everything lines up and risk is low. My plan stays the same regardless
of whether stocks are in a bull or a bear market. There will always be
trading opportunities if we trade in the direction of the primary trend. Technical analysis is crucial here in helping us understand the nature of the markets and determining the odds of making a profitable trade. In a bear market the behavior of the primary trend will
change. This is because investors change their focus to the short term as they become increasingly risk averse. This makes the market move faster and become more volatile. When I talk about having the odds in our favor, I want to share with you how I evaluate a trade. From a fundamental perspective, this is not a time when the odds are in our favor. Corporate earnings as measured by the S&P 500 were growing in the double digits in 2006. In 2007,corporate earnings dropped down to a single digit growth rate and in the third quarter of 2007 the S&P 500 collective growth rate dropped to less than 1%. This is not the stuff of bull markets. We won't find out what the growth rate of the S&P 500 will be in the fourth quarter until the first quarter of 2008,but many economists are now forecasting that corporate earnings for the S&P 500 are likely to contract or develop a negative growth rate as the economy slips into a contractive mode.  It is not hard to see why.

The collapsing housing market is getting worse. Here is what I recently read in The Washington Times, and I couldn't have said it any better:
This year's housing bust is shaping up to be one of historic proportions. Sales and construction have sunk to levels not seen since the 1990 savings and loan crisis, while foreclosures and price drops are the largest since the Great Depression ---- and expected to get worse next year. The only thing going up in housing is the default rate! The housing and mortgage crisis has escalated into a full- fledged global credit crunch in which the full extent of the damage is unable to be assessed as long as real estate continues to deteriorate. Around $100 billion in subprime exposure has been written off at banks and brokers worldwide this year, and next year could be worse. Oil at the Century Mark If that wasn't enough, we still are facing a problem with crude oil prices just a hair away from $100 per barrel. It is only a matter of time before the rising price of oil begins to break the back of the global economy.

My plan of action is to pay close attention to what the technical market is telling me. The best measure of market liquidity is the number of stocks advancing and declining, or market breadth. When liquidity is moving into the stock market, more stocks will advance than decline. Obviously, our odds of making a profitable trade go up when market breadth is strong. Conversely, when liquidity is moving out of the stock market our odds of losing money on a long position increase considerably, so the direction of market breadth is crucial to determining when the odds are in our favor. Essentially, this is the principle that ships rise when the tide is up and fall when the tide is low. So where does market breadth stand now? I will walk you through the arrows in my quiver of market breadth indicators and I'm sure you will come to the same conclusion that I have.  If you look at the advance and decline line, the NASDAQ has been falling for most of the year. The NYSE started a downtrend since the credit crunch developed at the end of May and has a pattern of lower lows and lower highs. As long as market breadth deteriorates like this, the good odds are not on the side of the bulls. Primary supports at the end of 2007 are still holding but by a very narrow margin, which could break down at any time given the fact that more and more investors are becoming risk averse. Another important measure of market breadth is the McClellan Summation Index, which is the cumulative sum of advancing issues versus declining issues using the McClellan Oscillator on a cumulative basis. Breadth Holds the Key There are two things you need to know about the McClellan Summation Index for both the NYSE and the OTC. The direction and level of the Summation Index are very revealing about the market's health. Technicians know that a McClellan Summation Index trending below the zero line is a precursor to a bear market. Bad things happen to the market when buying momentum is this weak and the direction of the Summation Index is heading down. Currently, both the NASDAQ and the NYSE are well below the zero line into negative territory, so we are on the very cusp of a  bear market by this measure. The odds are clearly not in our favor on the long side of the market as long as decliners are swamping advancing issues like this. I am fully confident that this will change at some point in 2008,but as long as breadth is falling, the odds of  losing money on the long side are very high. One of my favorite breadth indicators is the cumulative ratio of new highs versus new lows. As long as more stocks are making new lows for the year than are making new highs for the year, investors are clearly in a liquidating mode. Here again, both the OTC and the NYSE are showing far more new yearly lows than new yearly highs, warning us that more stocks are in downtrends than are in uptrend’s. The bull market is also losing its potency. I think it is also revealing that each successive rally attempt that we have seen over the last three years has had fewer and fewer stocks participating on the upside. The duration of the rallies is becoming shorter in time. When the majority of market breadth indicators are this bad, it is time to make risk management your top priority. Money management becomes paramount. How much risk exposure you take and how you manage the risk under deteriorating conditions is essential to your plan of action. The stock market will tell us what strategy to use. If primary supports can hold and market breadth turns favorable, we play the long side with a bullish bias. If primary supports fail and market breadth declines, we play the short side of the market with a negative bias. The key to making money in a bear market or a bull market is to trade in the direction market breadth is heading in order to keep the odds on your side. The fact is that about 80% of stocks go up in a healthy market environment, but 90% of stocks go down in an unhealthy environment. Currently, I am recommending that we continue to have a large percentage of portfolios in cash, given that market breadth is negative. If the primary trend turns bearish and market breadth continues to deteriorate, my plan of action is to begin taking short positions made up of exchange traded funds (ETFs) that go up when the stock market goes down. In a very short span of time, we will find out which hand to play. Keep in mind that I am neither a bull nor a bear; I am just focused on being right. Stay tuned for what I guarantee will be interesting times.

[Stocky2000]

great post oliver thanks...

[Stocky2000]

ugly session today i believe we are in bear market...

Go with the trend:

To do so, we must be able to recognize the trend and make it our friend. This is the critical point.

Fundamentals do not move stocks. The street is littered with 'low P/E' stocks that keep going down. The only thing that moves a stock price is buying pressure.

Technical Analysis is key. Buying pressure is best measured using charts. Basic understanding of key chart patterns can give us an edge in determining the price levels at which stocks will change or continue direction.
We don't care about companies. We are not interested in being cheerleaders for any company. We only want to make money by buying and shorting stocks.
We are Traders, not Investors. 'Investors' are willing to hold onto losing positions because they 'believe' in the stock. 'Traders' are not!
Trading is highly personal. There are many rules to trading that are non-negotiable! But  within the confines of those rules, there are infinite variations of styles, depending on your personality, risk toloerance, time of year, money management, etc....Every trader must find his own style and that takes time.
Buy and hold is NOT a strategy. Holding onto a position because the trend is intact is what we're all about. But holding onto losing positions, just because we THINK it will turn around, is a losers game.

[Stocky2000]

my prognose was right:)