​My opinion has not yet changed and I think we are still in the middle of a bear market. How long this bear market will continue is anyone’s guess. It could end next month if $SPX makes an all time high and breadth turns bullish, or it could end in 5 years – nobody really knows. For now I am already seeing first stages of an overbought condition develop. The percent of stocks above the 20-day exponential moving average for $SPX is already approaching 60%, which is overbought for a bear market. Next logical resistance level for $SPX is around the broken support at 1993 – a great place for it to fail.
CHART OF $SPX   
CHART OF QQQ (video bonus)

What will it take for me to turn bullish? Lets look at the chart of New York Stock Exchange Composite ($NYA) that I showed in the past. Four indicators are present on this chart:
1.The 50 and the 200-day simple moving averages
2.New Highs less New Lows Percentage
3.Bullish percent index
4.Percent of stocks above the 200-day exponential moving average
What I am seeing is that market breadth for $NYA is still very much bearish. Currently all 4 of the above indicators are in the bear mode. If/when at least some turn bullish, we will re-assess and see if a new bull market is upon us.
CHART OF $NYA
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Finally my custom Market Breadth Index (MBI) is firmly in a bear-market territory. The only positive thing I can say about the current market stance is that one of the raw inputs for MBI (RAWMBI) is somewhat oversold. It is certainly not oversold enough to call for any kind of bottom. In the past RAWMBI had to get to teens or even single digits before the bear-market bottom was put in.
I use MBI in generating tradable signals for my subscribers – check out the backtesting results here: http://www.masterchartstrading.com/performance.html
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Both bonds and stocks rallied hard today. In fact bonds gapped up in the morning and maintained their gaps by day’s end. This further shows that money is seeking safety. There is more then one place you could find safety, but United States Treasuries certainly come to mind. Further downside pressure for stocks would very likely help bonds.
CHART OF TLT
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The diversified bonds performed even better then TLT. AGG was able to close above the peak from October, for a possible breakout. AGG is rapidly gaining upon its all-time highs and a breakout above them would call for further upside.
CHART OF AGG
LONG-TERM CHART OF AGG

Unsurprisingly the Dollar index gained on Friday against other currencies and especially against the Yen. 52-week highs are close at hand and this will likely weigh on commodities of all sorts. Gold comes to mind.
CHART OF $USD
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Gold is volatile and rather difficult to trade, so any extra insight into the future of gold price is always welcome. I have been experimenting with various trend and gold miner’s market breadth indicators and came up with first version of my new Gold market breadth indicators (GDXIND). Decent data is available going back to 1995 and the chart below shows price of gold with the actual price removed and the 50 and the 200-day moving averages instead. As you can see GDXIND does a decent job of calling the bull and the bear markets and an OK job eliminating several whipsaws in the long-term trend. This indicator is still experimental, but for now, the trend in gold prices is looking to be firmly down.
 
         The long-term weekly chart of gold below shows lower lows and lower highs being made – a trademark of a bear market. The latest rebound is currently in the Fibonacci retracement area off the lows set in November of last year. This would be a good place to look for a failure for gold prices.
LONG-TERM CHART OF GOLD
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Very short-term, the daily charts of gold shows a possible cup and handle pattern with a breakout target around 1190. Should this cup and handle play out, I will need to re-assess my bearish posture.
GOLD CHART
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Chart of GDX shows a similar pattern of Fibonacci retracement with a 61.8% retracement in the $15 area – the same area of a previous peak from January high. This is also a good place for GDX to fail.
CHART OF GDX
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         Oil is in the middle of an oversold bounce. My best guess is that shorts will come in around $36 and attempt to push the prices lower. Should this area hold, oil could rally the next high-volume resistance area around $46. Long-term oil is still bearish, so its not on my radar to go long any time soon.
CHART OF $WTIC
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I got several questions from my subscribers regarding NATGAS today. Below is my answer:
“NATGAS is super volatile and trading the triple leveraged DGAZ is kind of like riding a racing motorcycle – it’s very exciting, but also very dangerous. If you haven’t yet watched my psychology of trading videos in the member’s section, please do so soon here: http://www.masterchartstrading.com/login.html
1.    NATGAS is not for everyone. Compared to stocks and bonds, I allocate a rather small part of my account to trading NATGAS (and other commodities)
2.    A loss should not hurt your portfolio and position sizing is of extreme importance. "
         NATGAS fall hard to $2.04, then started rising in what I think is a rising wedge formation. A rising wedge in a bearish security, like NATGAS, is a bearish continuation pattern. A close below the trend line, would almost certainly call for at least a retest of multi-year lows. NATGAS is currently at the high-volume resistance area, so a failure here is likely.
CHART OF NATGAS
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Trade Alerts Service is now live – please sign-up here!
That’s it for this week’s market recap,
Best Regards and have another great trading week!
 
Alexander Berger (www.MasterChartsTrading.com)

I have been saying that stocks entered a bear market some time in September of last year. The October 2015 rally that almost reached new highs was likely the first bear-market rally of this new bear market. (A bear market is characterized by lower lows and lower highs.) I think we are currently in the 2nd bear market rally. Speculators will attempt to pick bottoms and push the prices higher, but trend traders (me included) will look for the signs of failure and attempt to time the entry on the short side. Subscribers are already sitting on around 8% profit from the short we opened in December.
       For now market breadth is decidedly bearish and the only positive thing I could say about it is that breadth is somewhat “oversold”. However, oversold in a downtrend is not very relevant because during the downtrends oversold is a rule rather then an exception. In downtrends we will look for overbought conditions to time short entries rather then attempt to pick bottoms. The bigger trend is down, so why fight it?
CHART OF SPY

I pointed out a possible inverse cup and handle pattern the chart of New York Stock Exchange Composite ($NYA) a few weeks back. Looking at the chart, it doesn’t look complete yet. At a minimum the downside target is about 8500, we got down only to around 8900.
CHART OF $NYA
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​Many of the higher beta ETFs hit multi-year lows and 52-week lows this week as well. IWM (small caps), XHB (homebuilders), EEM (emerging markets) are pretty much following the general market, but from the much lower levels and are by extension much weaker the general market.  

Bonds broke out above September-October highs, but fall back this week. For now the breakout is holding and the pendulum is swinging in favor of stocks, at least temporarily. I think bonds are bullish and the longer-term weekly chart shows a possible cup and handle formation. A breakout above the lip of this cup with a weekly close above $127.56 should trigger the move higher. A conservative estimate is at least a challenge of all-time highs from 2015. A more aggressive estimate would call for new all-time highs some time in the next 3-6 month.
CHART OF TLT
LONG-TERM TLT CHART
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The dollar is still pushing towards 52-week highs. There were fresh hints for more stimuli from Mario Dragni and Haruhiko Kuroda, respectively of the European Central Bank and the Bank of Japan. This is understandably bullish for the US dollar.
CHART OF $USD
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Gold and gold miners are sending mixed messages: gold is trading above its 50-day moving average, while GDX crashed through support, hit an all-time low and is now trading below the 50-day. Which one is correct? It is indeed difficult to say sometimes, and when such conundrums hit me, I simply stay out of the particular market.
       My gut feeling is that gold is correct and a rally to $1140 or even $1190 is not to be ruled out. Its possible that a cup and handle pattern is playing out on the chart of gold. If correct $1190 would be the upside target for the move.
GOLD CHART
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GDX chart is a mess, but if gold rallies, there is no early reason why GDX should not at least attempt a bounce to around $15.
CHART OF GDX
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Last week I pointed out that several oil related funds such as Energy fund (XLE) and Oil & Gas Equipment Services fund (XES) completed their downside targets for now. (Of course occasionally an overshoot occurs like the one that just happened with the gas-related ETF – FCG.) But, lo and behold XLE and XES bounced (along with the rest of the market) at exactly the targets! More importantly, a similar pattern completed on oil chart, and we got a strong short-covering rally. Last time a similar rally occurred was in August of last year and oil bounced as much as 35%. Current bounce is around 17%, so more upside would not surprise me. Bigger trend is clearly down (we hit multi-year lows), so I will be looking for signs of a failure. There is some resistance in the $37 area, and very strong resistance in the low to mid $40s.
CHART OF $WTIC
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       NATGAS is a bearish security. Chart of NATGAS is showing a possible rising wedge. As I said before, a rising wedge in a bearish security is a bearish continuation pattern, once the wedge is broken to the downside. Should this wedge break down, a retest of multi-year lows would be very likely.
CHART OF NATGAS
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​Trade Alerts Service is now live – please sign-up here!
That’s it for this week’s market recap,
Best Regards and have another great trading week!
 
Alexander Berger (www.MasterChartsTrading.com)