Longer-Term Outlook

The charts will be updated by every Saturday. When no change to text, [NC] will be used. Click for favorite investment websites or to go to the Investors' Forum.

The longer-term indicators below show an DOWN MARKET (4 out of 6 indicators), within an intermediate-term BULL CYCLE, within a longer-term BULL TREND. The market did reaffirm its all-time high with good breath, which generally means the market will move higher. The BULL MARKET continues. More comments on the bull or bear market are way below along with a chart from 1871.

[NC]  A 20-year monthly chart gives a long-term perspective on the current action. A bull trend was signaled in early July 2019 when the MACD cross occurred.The trend almost turned six weeks ago, but then the Mexican tariffs were announced -- then they were dropped.

[NC]  Included in the chart are the 12-month and 36-month simple moving averages. The MACD is based on the difference between the 8 and 30-month exponential moving averages with a red 7-month EMA of the MACD, the signal line. Crossovers indicate a change in the primary trend and seem to be a good indication of where the market is going. The window at the right gives a magnified view of the recent monthly action.

[NC]  A four-year weekly chart of the S&P 500 index shows a record high on 9/21/18. On both Friday 4/26/19 and Thursday 6/20/19 a new record high was set. The previous bear cycle started on 10/22/18 and ended on 2/15/2019. The chart shows a bull cycle.

[NC]  Over 70 indicates an overbought market, and the red down-arrows indicate when the 9-week RSI drops below 70 -- perhaps a time to take a short-term profit thus reducing risk. The MACD shows when the bull and bear cycles occur -- a rise above or below zero.  The cycle determination is explained in more detail on the Observations page. A weekly chart should be used to determine the market trend. Then a daily chart can be used to time entries or exits.

The technical indicators listed below give a feeling for the strength of the overall market and whether there are signs of a turn. A good confirmation of a turn from bullish to bearish is the 52-week new lows exceeding the thresholds below.

  • Price Trend of S&P 500 - DOWN
    • Daily S&P 500 Moving Averages -  UP in a BULL Cycle
      • Bull: price above 200-day SMA  -  BULL
      • Bear: price below 200-day SMA
      • UP: Both 50-day & 200-day EMAs moving up - UP
      • DOWN: Both EMAs moving down -
      • MIXED: averages not moving together 
    • Weekly MACD(5,26,0) Histogram + or - (see chart above) - BULL Cycle
      • Percent of S&P 500 stocks above their 200-day EMAs greater or less than 60% - DOWN

      • Market Leadership (relative strength) - UP  
        • Small caps generally lead large caps - DOWN
        • Growth stocks lead value stocks (small-cap) - UP
        • Technicals (QQEW, equal-weight Nasdaq 100) tend to lead the general market (RSP, equal-weight S&P 500) - UP
      • McClellan Summation of Advances & Declines of Nasdaq (slope) - DOWN
        • 52-Week Highs and Lows (excluding ETFs) - DOWN 
          • NYSE New Lows - UP if less than 45 for three days - DOWN
          • Nasdaq New Lows - Up if less than 70 for three days - DOWN
          • 3-day MA of Nasdaq NH-NL positive or negative - DOWN
        • Consensus of the above  - DOWN ( 4 out of 6 ) in a BULL Cycle 

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        Bull or Bear Market?

        [NC]  Alexander Elder gives the long-term view that it has been a bull market since the March 2009 lows. Now a bear market has started as John Murphy indicated on Friday 12/21/18 when he said "This week's drop by all major stock indexes below their early 2018 lows confirms that U.S. stocks have entered a bear market. Some parts of the market have already crossed the -20% threshold which also defines a bear market."

        [NC]  Now the question is: Have we moved back to a bull market?  The S&P 500 and Nasdaq Index have broken through the resistance of the November highs and crossed above their 200-day moving averages, which means the bear market is over. And now the indexes have reestablished their move above their 200-day moving averages, and they are way above a -20% drop that signals a bear market. The bull/bear trend is a long-term indicator and would eventually confirm the market direction.

        [NC]  This chart gives a perspective on past market drops during the last 11 years. A bear market is generally considered to be a 20% drop from the last major high in the major indexes. In addition, a confirmation of this would occur when the price drops below the previous major low, which it did.

        The chart below gives a really long term perspective. These are true bull and bear markets and are shown by the blue and red colors, respectively. The recent "dip" does not look very significant on this chart. Note that the percentages shown are the amounts above or below the regression line. The market is currently way above this line. At some time it is likely to move below it -- the next bear market.

          The source of these charts is given at the uppper right of the chart. This page is for amusement only, and should not be taken as advice to buy or sell anything.