Following up on my post from two weeks ago, Maybe Baby Bear, US large cap stocks are now closer to a major bear market call with a potential Mega Trend breakdown (see chart below). A key reminder: should the bear call occur it is vital to remember that such a break starts the 3 month clock, which over the past 25 years has shown that the bear will be confirmed IF the Mega Trend (see prior posts) does not reverse its signal within the 3 month period.

A confirmed bear signal occurred only twice in the past 25 years: 2001 and 2008. Every other time the bear signal was negated in the requisite 3 month period. The real economy reason was central bank easy money actions. This time, however, all indicators suggest central bank actions will not come to the easy money rescue.

Process:

* Bear signal
* 3 month clock
* Confirmed bear or reversal and bull resumption