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Correctly Defining “Bear Market”

weekly Chart In Focus

I am starting a personal crusade to expunge the notion of “10% is a correction and 20% is a bear market” from our collective lexicon.  It is among the most meaningless, useless, and untrue statements out there.

The reason I dislike it so much is that it offers no insights about what a trader or investor should do.  If you find the market down some percentage, and conclude that, okay, it is a “correction”, then so what?  What does one do next?

Every 20% decline goes first through 10%.  So... Read More

Eurodollar COT Says Ugly Drop Is Still Ahead of Us

weekly Chart In Focus

The ugly decline I have been forecasting for almost a year now seems to have gotten an early start, thanks to word of that forecast getting out to a larger audience.  I have never been accused of moving the market before, so this is a new experience, and it leads us to the question of what to do now in response to that movement.

To review, this expectation of an ugly decline comes largely from the leading indication we get from some data in the weekly Commitment of Traders (COT) Report,... Read More

Shanghai’s Crash

weekly Chart In Focus

The rapid drop in the Chinese stock market earlier this summer has brought out a lot of comparisons to the U.S. stock market crashes of 1929 and 1987.  Assuredly there is some pattern similarity, but the difference in both of those cases was that the whole world’s stock markets went down in unison.  China’s 2015 crash has thus far not had a large contagion effect; the spot SP500 Index is still just 2.2% away from making a new all-time high.

This week’s chart argues that the better... Read More