A Bounce In A Bear

Hi there, and welcome back to RI's S&P 500 blog.



The definition of a bear market is one that makes lower highs and lower lows and one that has moved more than 20% lower from its peak. As the chart above clearly demonstraights, we are now down more than 50% from its peak of more than one year ago and we continually make lower highs and lower lows. In a simple sentence - this is a bear market and will be until the market can establish a pattern of higher highs and higher lows and one that stops going down!

Having said that, we here at the RI, we have been looking for an ultimate move lower into the high 50's on the SPY. This target was established when the market confirmed the bear-flag-pole formation - refer to blog from March 10th - 'To give us an idea of a possible downside target one only need to look at the bearish flag-pole formation. (where the market peaked last Aug. near 128 - then fell dramatically down to a low near 82 in Sept. - then rallied back up to 105) . A break of 82 (which happened in Nov.) suggests prices need to fall down to the 59 level.'

What does this mean, traders ought to be short on a break of the recent lows (at or near 73.74) with stops just above the recent peaks (at or near 95.00). Investors have no business even looking at the US stock market for now. Current downside targets suggest the 59 area on SPY should be tested in the coming months.

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

Lower highs and lower lows defines a bear market

Hi there, and welcome back to RI's S&P 500 blog.



The bear grinds on and on....

Looking at the above chart one can't help but feel a little depressed. We are now down 50% from the peaks amid 30 year highs in unemployment and a frozen banking system.

As a leading indicator, the push lower (and a break of the important fall low at 73.74) suggests we are not out of the woods yet. And the January Barometer (please visit website at http://www.the-rational-investor.com for your copy of this handy report) suggests there is further price deterioration ahead. Ugh!

Again, referring to the chart above, we are now comfortably within a steep downward pointing channel (deep red lines). This is bearish and will remain so until we start seeing higher highs and higher lows. As well, the moving averages are very comfortably bearish (13EMA < 30 SMA) also suggesting we will remain bearish for some time to come.

Should a rally come (very remote at this time!), my ultimate upside target for the present will be the gap (gaps don't like to be left open - especially on weekly charts) between $105 to $110. This would represent a move back to 10,000 on the Dow and a big psychological target going forward too.

What does this mean, traders ought to be short on a break of the recent lows (at or near 73.74) with stops just above the recent peaks (at or near 95.00). Investors have no business even looking at the US stock market for now. Current downside targets suggest the 59 area on SPY should be tested in the coming months.

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

The Painful Road Lower

Hi there, and welcome back to RI's S&P 500 blog.



The important 73.74 has been broken on the SPY suggesting there is further downside price pressure in our future (ugh!).

As stated previously, weekly signals are still very much bearish so there is no reason for an 'investor' to be even looking at the stock market.

Traders should indeed be short from these levels with your associated stop just above the recent highs at or above 94.55...

Down side trading targets: The recent failure of the market at 73.74 suggests lower prices going forward. To give us an idea of a possible downside target one only need to look at the bearish flag-pole formation. (where the market peaked last Aug. near 128 - then fell dramatically down to a low near 82 in Sept. - then rallied back up to 105) . A break of 82 (which happened in Nov.) suggests prices need to fall down to the 59 level

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

And The Bear Grinds On

Hi there, and welcome back to RI's S&P 500 blog.
(The is a re-post of the missing blog from Feb 25th, 2009)



The recent trading range is being tested to the downside. Among further talk of bank failures in Europe and North America, the selling on Wall Street continues.

Because this a re-post and not the original post (lost somewhere) I will keep comments to a minimum.

Traders should look to go short on a move in earnest through the fall lows at 73.74 on SPY. Should that trade occur, place you stops just above the high of the range at or just above 94.95.

Since the 13EMA is well below the 30SMA, investors shouldn't even look at the market. We are very much in a bear market with lower price expectations for the future.


That's all for this re-post and lets hope next week's blog isn't lost,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

Here comes another Big Test

Hi there, and welcome back to RI's S&P 500 blog.



One might say the honeymoon is now officially over!

After a month of love over the new US President partisan politics have once again taken over Washington. As a result, we have now come to the first big test of the new Obama administration.

On concerns about over spending (of all thing!) the recently proposed 'stimulus' package has now come in doubt. As the current bill has been delayed in the US Senate, equity prices (and specifically bank stocks) have fallen. Should the market believe the package will fail to meet its' needs prices will break support (currently near $80) and a new sell signal will be established for the US equity markets.

The true irony of this situation is the fact that the now 'fiscally conservative' Republican party are the same politicians that saw the total US debt more than double over the course of the Jr. Bush years. Now the remaining Republicans in the US Congress have abandoned the new President - suggesting that his proposals are nothing more than waist-full spending, how pathetic! Remember too, not a single Confederate state voted for Obama last Novemeber, who say's race isn't an issue any more......

I'll get off the soap box now.

Summary: Short term traders may look to play a break of the recent trading range (as noted on the chart above). Investers have no business even looking at the stock market now.

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

The Bottoming Process Grinds On

Hi there, and welcome back to RI's S&P 500 blog.



The short term bottom we thought was in the market last post has been broken. While we know the medium term trend remains down and shall be so until the 13 EMA crosses back above the 30 SMA, there were indications we might get a rally into the Obama inauguration (Jan 20th). The January Options expiry proved to be too much supply and the little uptrend that was in place was indeed broken. Notice too that the market rallied up to the 13 EMA and then backed off [Technician's note: This is a great little timing tool on its own as well]. Should we put in any type of top over the coming weeks it shall suggest the lows of the fall will need to be tested in earnest.

We are once again left sitting on the sidelines for the time being. As previously stated, medium & long term investors have no business even looking at the stock market yet, but traders shall (at some point) be given an entry point on a long trade that I believe will ultimatly take us back to the 50% level (near 113). Considering the seasonality, I wouldn't be surprised if that occurs some time into the spring. Unfortunaly, that trade isn't here yet, so once again we are left to sit on cash and watch the fireworks.

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com

A Bull run amid a Bear trend

Hi there, and welcome back to RI's S&P 500 blog.
Hope all had a good Christmas and a happy new years

Now on to the market!


After months of enduring one sell signal after another, we can finally call a bull trading signal and suggest traders ought to take the appropriate stance. Considering the seasonality, the poor investor sentiment and the anticipation of a new stronger leadership (along with billions of dollars of stimulus) one should not be surprised to see a tradable bottom come in.

Having said that, this can only be viewed as a short term bullish signal, the medium term down trend is very well in place and a rally in the short term shall only take us back into the actual down trend channel. As well, the lows of fall ($73.74) were never really tested in earnest leading me to believe this level will need to be retested again in the future. It may take months, maybe even years, but this level shall be tested again.

With the market (and the SPY in particular) closing above the previously stated upper trading range mark ($92.38) the market confirmed a short term bull flag formation and now has an initial upside price object of $103.44. Coincidentally, we have the gap from September to be filled near this level, and the bottom of the down trend channel rests near this level as well. Adding to the bullish case, the bearish spread between the 13EMA and the 30SMA is very wide and while this in itself isn't a reason for the market to move higher, this relationship should come back into normal levels. And lastly, the steep down trend channel in place since the gap lower in September has been broken and now represents support rather than resistance. Again, this in itself doesn't suggest higher prices, butit does suggest support should the market need to pull back.

Put it all together and I think we have something quit normal. Seasonality, sentiment and short term euphoria are all contributing to an oversold rally within a long term bear market. For those that make a living from the stock market, make your money now because once the rally is over, we will probably head right back into doing nothing.

That's all for this week,

Brian Beamish FCSI

the_rational_investor@yahoo.com

the-rational-investor.com