On CNBC at about 2:52pm, Matt Nesto declared that the bear market was over and a new bull market has begun. His evidence: “October is the bear killer.” Several bear markets in history have ended in October, and its October now, so the bear market must be over. Right?
Seems a bit flimsy to me.
Nesto also mentioned the VIX, but is the VIX’s bull run really at an end? Here is how I draw my VIX trend line (click to enlarge):
The chart uses daily closing levels, and I think that the purple line best represents the major trend. The green line is a minor trend line that has indeed been breached. Before we can presume a new bull market, or even a new bear-market rally, I think the purple line needs to be breached.
If you look at an intra-day chart of today’s trading, you will see that Nesto’s report almost perfectly top-ticked the action. So far, so bad.
If CNBC had informed us that the bull market had ended last year, I would take today’s declaration more seriously. But what are the chances of CNBC getting this right? In fact, I’m sure they’ve got it exactly wrong.
Let the record show that CNBC declared the 2008 bear market to be over on the very day that the great bull market that began in the early 1980′s came to an end.
Calin Popescu Tariceanu, Romanian prime minister on local TV, not CNBC:
“On the lower levels, people are in water up to their necks, while on the upper floors the music still plays on, just as it did in the film. And those people listening to the people listening to the music, not knowing that the Titanic has hit an iceberg, that’s us here in Romania. That’s just what we’re like.”
Matt,
I agree on your view on the VIX trend. I might go further to say the VIX needs to get below the recent record breaking levels. Even then I would consider that an attatractive point to add to my short position. The fundamentals have not improved. I am now 10% short, my biggest short position ever. (Short SPY at $97.26)
Very flimsy indeed. next week will be a bull killer
Bloomberg: The Purchasing Managers’ Index [of China] fell to a seasonally adjusted 44.6 last month from 51.2 in September”
World economy falling off the cliff. This is much worse than expected. CNBC is trying this “better than expected” bullshit again so I’m counterattacking.
China is doing well. Europe’s current reading is 41.3 (lowest since eleven years) – this translates to a bullish annual growth of minus 6% in industrial production. New orders is down to 36.2… No need to annualize this figure as the current mild recession aka “The Cliff” is already priced in. LOL
I not betting on it, but moving some points higher to rout the weak shorts would be such a nice electorial move. A break above 986 could give us 1020.
Hi Yerk,
I presume you are referring to the SPX? I see a top of 1007 on 10/13 and a 1044 on 10/14.
I am always interested in others viewpoints so I am just curious how you came to the 1020 conclusion.
Thanks
Newbie,
I picked 1012, give or take, if we are going to violate the triangle. This is based on touching or piercing the 60 min 200MA–and trying to guess where that will be over the next trading day or two. Perhaps Yerk looked at something similar.
Wave 2 of 3 of 3 did this. Will we do it again? Don’t know, but it would fit with the election rally (4 of 3 of 3) and then dump thereafter.
It also allows the big guns to try to shake out a number of retail shorts just over 986.
junglegirl, I’m thinking along these lines as well. Newbie, take it as an indication. 1000 is the 78% retracement of the mid October move from 840 to 1044, but pretty close to 986. 1044 would be the 100% retracement. 1020 was a level with a bit more market action in earlier October, 1044 a spike.
My cristal ball is not a clear as Matt’s with regard to precise levels, I scale into and out of positions.
Remember Mark Faber.. whether you like him or not..
US slows down.
Disaster for Asia the producing country.
Greater disaster for middle east and russia who supply asia with materials.
so we’re far better off at the end.
Yerk, Junglegirl,
Thank you for you thoughts. I have a stop at $100.3 on the SPY so I could have been one of those retail victims.
I figured if I was stopped out I would remount at a higher price. Of course since I don’t trade full time I may miss my chance. Now that I think about it, I have been burned several times by overly tight stops in this market, most times I failed to remount.
I also planned to scale in if they took the SPX up. Since this is my first sell I should give a much longer leash otherwise I never get a chance to build a position. Wow, it is scary how flawed my logic was. I am still trading small positions why I learn from my mistakes.
Newbie,
So as not to confuse you with my post, I don’t plan to get stopped out of my shorts if SPX hits 1012, rather I plan to add more.
Junglegirl,
You and Yerk were very clear. I just realized that my plan was internally inconsistent in that I planned to get stopped out but still add more later. Thanks.