The rally off of the September lows surprised many market observers, myself included. As we get closer and closer to the all-time highs, is my bearish posture still warranted or not? Let us examine the bulk of evidence. 

Trend indicators are still firmly in the bearish camp. If you look at the 50-day moving average, you will notice that it is still below the 200-day moving average. The same goes for 50-day and the 200-day exponential moving averages. These facts alone are enough to set a bearish bias. But as I will show, there are quite a bit of false signals with this system. ​
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       In trend-following strategies, such as the one I adhere to, you have to have a bullish or bearish bias. Is the stock you are trading in a long-term uptrend, or a long-term downtrend? If in an uptrend, it makes sense to look for oversold conditions and time your entries on the long side. Vice versa: if you stock is in a long-term downtrend, it makes sense to short the rallies. 
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​I was looking over some historical charts of New York Stock Exchange composite index ($NYA) and found some amazing similarity to today’s picture. Back in January-February of 2008, $NYA traced out a very similar pattern to what we have right now. 
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         A tough week for those playing the downside in the stock market. S&P 500 ($SPX, SPY) was up over 3% for the week on improving breath. Currently stocks are overbought and I still think $SPX is now in a long-term downtrend. If this is indeed the case, then we have a short setup in stocks right now. Read the rest of this post here

It appears that the support from the lows set on August 25, have held. SPY, the S&P 500 tracking ETF, tested it on Tuesday, but lower prices were rejected. For now. Short-term rally is on. I still think that, at the very least, we are either in the middle of a correction, or possibly the beginning of a bear market, time will tell. For now both the regular indicators and the market breadth indicators are pointing to more corrective action, rather then a V-Shaped recovery. Read the rest of this post here