What It’ll Take For A Bear Market In Equities

I know it’s impossible to believe – absolutely impossible – but there will be a bear market in equities one day. There will come a time, I promise you, when people will recall the “Stocks Only Go Up” phrase on everyone’s lips and laugh at how foolish everyone was. But whether the bear market begins next week or in ten years is anyone’s guess.

The key is to keep an eye on minor changes. Below are ten index charts and a few words about what is required in each case for even a small breakdown to take place.

Couldn’t be simpler. The horizontal line is the price.

This one needs to break that ascending trendline.

We were slammed up against that trendline for many weeks. Now, prices will treat it as support. We would need to slip below that multi-week range.

The trendline breakdown has already started, although just barely.

A trendline break is required, though there is not far to go.

This is a longer-term chart because the support trendline demands it. It would take some extraordinary damage to break this trend.

This trendline is already broken, and prices are hanging on for dear life.

This, to me, is the most obviously bearish chart of all. Almost everyone thinks energy is in for an amazing bull market. I’m the outlier; I believe it’s doomed.

The most inscrutable, and most overvalued, chart of all is the one illustrating small-caps. All I can say is that it’s at painful levels, and this uptrend is absolutely not sustainable.

Lastly, the one and only chart I want to see actually break higher is of volatility. Keep an eye on that line.

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