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.

[NC]  The longer-term indicators below show an UP MARKET, within an intermediate-term BEAR CYCLE, within a longer-term BEAR TREND.  A BEAR MARKET has begun with the huge drop shown below. 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 BEAR TREND started during the week ending 2/28/2020 when the MACD cross occurred. 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 is below. A record high occurred on 2/19/2020. Then a serious crash occurred due to the fear of the coronavirus affect on the economy. This caused the start of a BEAR CYCLE. The previous bull cycle started on 2/15/2019 and lasted 55 weeks.

[NC]  An RSI over 70 indicates an overbought market, and the market can stay overbought for a while in a strong market. 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 - UP
  • Daily S&P 500 Moving Averages - UP in a BEAR Cycle
    • Bull: price above 200-day SMA 
    • Bear: price below 200-day SMA - BEAR
    • 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) - BEAR Cycle
  • Percent of S&P 500 stocks above their 200-day EMAs greater or less than 50% - BEAR Cycle (38.0%)

  • Market Leadership (relative strength) - UP  
    • Small caps generally lead large caps - UP
    • 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) - UP

  • S&P 500 Accumulation/Distribution - above or below its 15-day EMA - UP
  • 52-Week Highs and Lows (excluding ETFs) - UP
    • NYSE New Lows - UP if less than 45 for three days - UP
    • Nasdaq New Lows - Up if less than 70 for three days - UP
    • 3-day MA of Nasdaq NH-NL positive or negative - UP

  • Consensus of the above  - UP (6 out of 6 ) in a BEAR 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 in a few short weeks, a bear market has taken over. A bear market is generally considered to be a drop of greater than 20% 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. This chart gives a perspective on past market drops during the last 14 years.

[NC]  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 primary 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.