Danger…Bear Spotted!

Bear Market Filter

I have good news and bad news…

…the bad news is that it is not safe to be an investor or trend trader (long only) in this market.  In the picture above, outlined in the circle I have a negative signal on my Monthly CCI setting.  So what is the significance of that?  The significance is that these negative signals happen very rarely and usually signal that something really bad is about to happen in the markets.  In the last 15 years I have only seen this 3 times.  The dotcom bubble of 2000, the financial crash of 2008 and for a short time in 2011 when Europe was in a major crisis.  This same signal has foretold every bear market in history going back to the worst one in 1929 and before.  So it is worth paying attention too.

A couple of other interesting things that may be of note:  

Although every year that has ended in 5 has been a positive year in the markets since 1870ish, in another statistic on cycles it is known that bear markets can begin towards the later half of years that end in 5. This maybe not something that is that useful a statistic, however I think it is an interesting observation.

The other interesting fact is in the work of WD Gann, the famous market forecaster thought to be the greatest trader that ever lived.  According to his observations on cycles, there is a strong possibility of a low in 2015/2016 using historical patterns that he claimed to repeat and could be forecasted in advance.  More on this here courtesy of safehaven.com: http://www.safehaven.com/article/35052/ganns-financial-table-still-working

Added to that, the work of Jonathan Cahn in his book the “Harbinger”, and now, “The Mystery of the Shemitah”.  As a precursor and as I have stated before, I am not particularly religious, but there are patterns and cycles in the market and who is to say that Johnathan is not correct about September 2015 being a bad month for the market?

So, now we are in the Shemitah year of 2015, and fact is, the five greatest economic crashes of the last 40 years – 1973, 1980, 1987, 2001 and 2008 – all occurred in Shemitah years – “those God set apart as Sabbath years.”.  For more information on this see an article here:  http://themillenniumreport.com/2015/01/the-biblical-shemitah-has-already-begun-2015-is-the-year-of-judgement/

So now that I have scared the living daylights out of all investors that read this article, what is the good news?

The good news is that if the correction of the last 2 weeks is only the beginning of a much larger decline, you have an opportunity to sit it out and wait for some of the best opportunities of your investing life to come by.  Imagine if you only began investing/trading at the beginning of 2009 or better you got out at the top of 2008 and began investing again in the Spring of 2009.  It would have been pretty difficult to not make money when everything is so cheap.

So, in conclusion, hang onto your hats, the multiple reasons above give me pause for concern, pause enough to stay out of anything that is multi-day hold or longer.  Of course there is a possibility that it really is just a correction similar to 2011 and that the up-trending bull that began in 2009 is still rolling forward, if that is the case my indicator will allow me to get back in in a month or two and will keep me safe as it has done in the past, but until then I am mainly in cash.

Stay safe, John