Tuesday, June 21, 2016

So – just what is a bull market?




In my previous post I referred to Ned Davis Research who deems that “a  Bear Market requires a 30% drop in the Dow Jones Industrial Average after 50 calendar days or a 13% decline after 145 calendar days.” Also according to Ned Davis Research during a study period from January 2, 1900 through December 31, 2010, (over 100 years) big corrections in the Dow Jones Industrial Average are actually quite rare.

Dips of 5 % or more totalled 378 or 3.4 per year
Corrections of 10 % or more was 122 or about 1 per year
Bear declines of 20 % or more was 32 or about I every 3.5 years

The business media claim that a decline of 20% puts the market into “bear territory.”

At Getting Technical our historical market studies dictate that bear market prints a lower low within a rolling 26 to 30 week time window. In other words – in order to be a bear, a broad stock index like the S&p500 must print a lower low within a rolling six month window – if not – then it is a bull. The S&P500 from late 2012 through June 2016 charted bear is based on a simple 26 week price channel and note the 2 downward violations of Aug 22, 2015 and finally on Jan 22, 2016 – we are now past the 6-month window and so if not a bear then it’s a bull.. 


7 comments:

Shawn Severin said...

Do you think small caps (IWM) are due to outperform? They have lagged for some time now. Thanks! Shawn

Gettingtechnical.com said...

Shawn

Good question

On a relative vs the S&P500 the small caps have been out perform since late May 2016

This is very bullish

Bill C

Shawn Severin said...

Where do you see $CAD going?

Gettingtechnical.com said...

Shawn

The CDN $ should do well with a new bull in the commodity space

Upside target 84 cents

Bill Carrigan

Shawn Severin said...

Do you think international markets will outperform the S&P500? VWO, VPL & VEU

Shawn Severin said...

IWM has underperformed SPY for the last 5+ years. Do you think it will outperform going forward with rising interest rates in the US?

Gettingtechnical.com said...

Shawn

I think a global bull - but I think the IWM is the way to go

Bill C