Sunday, July 18, 2010

Bear Market Kick-off


There is compelling evidence that the leg down that started at the end of April represents the beginning of a bear market. By many measures, it reached levels of bearishness similar to the leg down started in august 2007.

Momentum ...


click to enlarge

The chart above depicts an average of the monthly and bi-monthly ROC (concept insipred from Will Rahal's blog).

Sentiment ...

source: StockCharts.com. click to enlarge

The chart above displays the 5-day EMA of the total put/call ratio. This is a great indicator for timing the intermediate-term swings. While reaching the 1.275 level represented a buying opportunity, it is also the level reached at the last bear market kick-off (red circles).

Breadth...

click to enlarge

Above I plotted the ratio of cumulative monthly advancing volume to cumulative monthly declining volume (concept inspired from Will Rahal's blog). Again, the latest leg down reached a level associated previously only with bear market sell offs. This level is below the one usually touched by bull market corrections (highlitghed by the green line).

1 comment:

Anonymous said...

interesting stuff