If we look at this market we can see the S&P 500 has lost all of its moving averages, although the 200- and 50-day exponential moving averages are right above today's close. They are both at 2037, so we can still get back fairly easily with one small rally. The problem is directly below. If we visit the S&P 500 daily chart we can see that on September 17 of this year we touched 2020, and then immediately tailed off and fell hard, all the way down to 1871. From there the market rallied once again, and hit 2020 for four candle sticks before finally breaking out. Once it broke out it back tested again with four candle sticks. A breakout then occurred, thus, 2020 is critically important support. Losing 2020 by a few points is not a breakdown, but you get the idea. You don't want to lose 2020 with force.

If we do it's quite possible the market has made the u-turn, and, thus, the bear market has begun and done so without any distribution off the top. It is possible that the way the big money did their dirty deed was by slowly removing themselves over time and we can see that in many of the broken stocks all over this market. I can't be sure about this yet, since we haven't forcefully lost 2020 on the S&P 500 at this moment in time. Just something to keep in mind. So now we discover what's next by watching 2020 with intense scrutiny. It's almost that time folks. Let's hope we get that one last rally I thought was likely, but if we don't we need to be ready for what's coming, and it won't be pretty. Protection and preservation of capital will be key over the next 12-18 months. If the bear has begun we would need unwinding up before shorting since the short-term sixty-minute charts are so violently oversold along with the daily stochastic's also being oversold.

The monthly charts I've been speaking of for so long are about ready to do their dirty deed, either from here or from one final move higher. But make no mistake, it's my belief that they'll kick in soon enough either way and cause some real pain for folks. I think the next year or so won't be too much fun if you're a bull. There will be usual wonderful, counter-trend rallies along the way when things hit critical support zones at extreme levels of oversold. The trend for some time to come, once the bear truly kicks in, will be lower and at times with intense force. If you're prepared for it you'll be fine. If you're not things will get tough on you emotionally.

Now let's stop for a moment and ask ourselves, is Jack right? I could be 100% wrong on my call. Most folks are definitely not calling for the bear market the way I am, and I totally respect that. There are some very smart and wise folks out there who say the bull will continue on throughout the coming year or so. They may be right. I may be wrong, but I have to live with what I see, and my work says the best is over or at best, one more rally, but the best for sure is over. Even if we make new highs the way it'll get done is through fewer and fewer stocks leading the way. It won't be across the board meaning it won't be healthy. New market highs won't necessarily equate to a healthy environment. We watch and learn every day. For the perma bulls out there, let's hope for one final move up.

Let me sum this up. I'm just a voice in the crowd. Some may agree with my thinking. Most probably don't. You have to decide for yourselves whether I'm on the right track or the wrong one. The monthly charts tell me market death is coming meaning a nasty bear market. There's always exceptions in this game. Maybe this time for some unknown reason those monthly charts and grossly overbought P/E stocks won't matter this time. That's always a possibility. I do my best. I guide as I see it. I am in the minority and most of you have many services to help guide you. Go with your heart. Go with what feels right to you.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.