Bear Market Topping

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

Last week the market had another 2% decline, erasing the last 4 weeks of gains.  This most likely has signaled an intermediate top in the continuing downtrend pattern. There have been about four bear market rallies of various sizes so far this year, each of the counter-trend rallies have retraced about 50% to 61% of the previous decline. Although some of these rallies, like June-July and Oct-November, in a Bear Market can be quite impressive, however, we are still in a definite downtrend if we continue to have lower lows and lower highs with elevated levels of volatility in both directions which has persisted all year long.  I would draw your attention to this week’s daily and weekly charts.  The green line that is drawn from the all-time high of 4819 at the beginning of 2022 and drawn in line with the peaks of each of the larger counter-trend rally is a great visual of the downtrend. So far, this year has been a “text-book” example of the definition of a downtrend – Lower Highs and Lower Lows.  Therefore, we are going to stay invested in the inverse of this downtrend until the data proves otherwise.  Furthermore, all three of our monthly indicators are still significantly negative, so we are still in a solid SELL signal.

​See the last 12 months below on the weekly and daily candlestick charts of the S&P 500, followed by the updated charts of our balanced and aggressive portfolios.