For one of the few times in history, my first bear signal that came in August was cancelled quickly by the Fed’s lack of action. But it is back in effect…
Now that the Fed is no longer stabilizing the market and we are in period of increasing interest rates, I believe that what should have started in August and continued uninterrupted into 2016 has now resumed.
Just how low the S&P 500 will sink I have no idea. I suspect that we will see 1500 before any really type of consecutive monthly bounce will come. This not to say we will not see some rallies. In fact, it is well known that during bear markets there are many false dawns where the market goes on one of its short rip your face of rallies.
However, like all of them in the past, they ultimately fail and bring the market back down. This crash has been coming a long time. It is healthy for the market. It is the time when it takes real skill to survive.
Until I see my bear market indicator give me the green light just like it did in 2003 and again in 2009, I will be in cash regarding any long term investments or swing trading opportunities. In the meantime I will be personally focusing only on very short term intraday trading. I wish everyone well as I take this semi-hiatus from the market and from this service. It could be 6 months or possibly even a year or more.
Remember, it is crashes like 2000 and 2008 that create the most wealth and opportunity for those that know how to navigate them. Just look at 2000 and 2008 on the above chart, avoid the drop and be ready to load up the truck when its over.
Good trading, John