BullBear Trading: Stock and Financial Market Technical Analysis

The Federal Reserve has initiated a program of unlimited, open ended, unending, unsterilized money printing.  Prior to the announcement of this course of action, the technical charts of the S&P 500 showed a significant number of daily, weekly and monthly divergences with the prior highs made in 2012 and 2011.  Since then, much of the bearish bias in the technicals has been either erased or is now in a position to be negated with another rally.  Should prior technical highs be taken out, confirming the new price highs, the case for a bull market going forward will be significantly strengthened.  While there are still valid scenarios which call for an important top at current price levels or at levels near the prior all time highs made in 2007, for the first time a technical case for a bull market is beginning to take shape.  

It wasn't too long ago that normally reliable technical conditions seemed to point towards an imminent major top.  But market conditions change, and when those conditions change, formally reliable technical setups fail and traders must adjust accordingly.  While it seems that in the short to intermediate term bearish setups have failed, it is too soon to say whether the longer term bear conditions have ended.  In this report we identify a clear set of indicators, conditions and relationships which can be monitored to provide confident signals of future market movements. 

There are three competing scenarios at this juncture:

  1. SPX is making a B wave high in this area with a C wave decline to follow, eclipsing the 2012 bottom and potentially the 2011 low as well.  The resulting bottom may mark the end of the bear market that started in 2000.
  2. SPX will continue to rally back to the area of its 2007 high, completing the bear market rally that started in March of 2009 and setting up the final decline of the long term bear market.
  3. SPX started a new bull market at the March 2009 low and started a new leg in that bull market with the June 2012 low.

In this report, we'll examine:

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