Is This Bear Ready To Hibernate?
If you follow my regular updates on the s&p, you know that I expect the market to head a bit lower within the next 5 months before we get to head for higher ground. No bull or bear market moves straight up, or straight down, and counter trend relief rallies are a normal and healthy aspect of market action.
However, I believe relief rallies do have long term effects on the overall market cycle, and considering all of the horrendous news this market managed to digest and still post a positive gain last week leads me to believe this particularly rally is a sign that the bear is preparing to hibernate. A word of caution though, the market, just like real bears will expend and exhaust every last bit of energy preparing for this event.
Overall the long term trend is still bearish, however this current rally is starting to have an effect on the indicators, and I believe it has been just strong enough to make the bears think twice about getting short. this is great news for volatility, and we should see "calmer" trading over the next week or so.
Weekly Chart:
As I said, the longer term weekly chart is still bearish, although showing some signs of weekness:
Daily Chart:
The shorter term daily chart is much more interesting While the weekly chart is showing signs of bottoming, the daily chart is showing outright divergence, and signs of trend reversal. RSI and PPO are showing divergence while the ADX is flashing a classic trend reversal pattern:
Industry Group Wrap Up
I put together about a 15 minutes video covering a wide range of industry groups, and chose the top 2 for those of you looking to go bullish:
Part 1:
Part 2:
The Big Day is Tomorrow:
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