Bear Market Rallies

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Last week the market lost about 1% off of the previous bear market rally. There have been several bear market rallies so far this year, each of which has retraced between 50% to 61% of the previous decline. Although these rallies in a Bear Market can be quite impressive, we are still in a definite downtrend if we continue to have lower lows and lower highs, which has persisted all year long.  I would draw your attention to this week’s weekly chart that shows last week’s rally achieved reaching the 61% (4006) retracement of the Aug 16th to Oct 14th decline with a high last week of 4028.  

The test this week was to see if this resistance area of 4006 holds or not.  Last week this area was penetrated with an intra-week high of 4028 but was not able to hold and closed below the 4006 area at 3965, so thus far it has not been able to penetrate and hold above the 61% resistance area.

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