Start Of A Bear Market? Inquiring minds want to know...

Scataphagos

Scataphagos

"Bear market psychology" includes time, relentlessness, and despair in addition to price.

The hallmark of a bear market is a price pattern of "lower highs and lower lows"... significant ones. The first sign of real bearishness is the market taking out the "prior significant low". IMV, the first place where bear psycho may be confirmed would be if the October, 2014 lows were taken out and maintained. Prior to that, as we are right now, there are other reasonable possibilities.

Stated another way.... it usually doesn't pay to get bearish on the market until it actually does something bearish.
 
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Chuck Krug said:
S&P is down 9,98% from the top

But Shanghai is down 38%
Dax down 18,98 so very near a bear market.
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Depends. The modern day definition of a bear market is "20% down". Years ago, like in the 50-60s, 20-25% declines were nothing more than "noise corrections".

If a market drops 20% in 6-weeks, then rebounds... it wasn't a bear market.

IF China and Dax are in bear markets, then we are "early" in them. Bear markets take time to resolve and time for despair to set in. China and Dax made their highs in April. If they're really in bear markets, it's waaayy too soon for them to be over. As a rule of thumb... look for an average bear market to persist for 16-24 months... a bad one for 4-5 years. (In some bear markets... especially those like natural resources and Emerging Markets... the total decline will be 90%-ish from the high.)
 
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I would say one of the first signs of a bear market is the failure to take out the current lower high that was once the previous low. That is, failure of a sharp rally to take out that current lower high/previous low. Like the rallies that repeatedly wiped out Livingston/Livermore in Reminiscences when he was trying to time the turn and short the market...

All in all, I think we're merely in 1997/1998 territory here... No shots have crossed the bow like the Microstrategy miss in Feb 2000 or the mortgage security hedge fund collapses in the summer of 2007. I believe bear markets in our market requires failures in our marketplace, not a foreign marketplace.
 
blah12345678 said:
I would say one of the first signs of a bear market is the failure to take out the current lower high that was once the previous low. That is, failure of a sharp rally to take out that current lower high/previous low.
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If the market breaks below the October 2014 low... then rallies back to it and it holds as resistance, that would be a crucial technical and psycho "pivot point" for confirming a bear market.

IMV... breaking below the October 2014 low would be the 1st warning sign the market might have become bearish. Rallying back to the October 2014 low and having it act as resistance would be a powerful, 2nd sign the market had turned bearish... and should not be ignored by hopeful/desperate bulls.
 
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Scataphagos said:
If the market breaks below the October 2014 low... then rallies back to it and it holds as resistance, that would be a crucial technical and psycho "pivot point" for confirming a bear market.
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One would hope... But the market has a way of messing with the best laid plans....
 
blah12345678 said:
One would hope... But the market has a way of messing with the best laid plans....
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Of course. But if breaking below SP 1820 is as significant as I presume it to be, we're not anywhere near that now... and other (tradable) possibilities exist.
 
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