Below, the euro — Is that a monster head & shoulders top that I see?
This is a monthly chart of the Dow going back two years. Note the volume dropping off bearishly on the climb from the September low. The diminishing volume suggests that the bear market will be extended and deceptive. I am using the monthly Dow to eliminate all intra-month movements, which could be confusing. I believe the continuing bear market will be expressed by a long series of monthly declines in the Dow — just as the rise from the September low was expressed by a series of rising Dow monthlies.
Below is a sensitive chart showing the percentage of NYSE stocks holding above their 50-day moving averages. The percentage now is down to 29.9%, meaning that 70% of the stocks on the NYSE are now trading BELOW their 50-day moving averages — and the percentage has been dropping off as we move along.
Despite these pictures of what is actually happening, I note that many big-name analysts are bullish. For instance, the famous Meredith Whitney states that she is “wildly bullish on the US.” She may be correct in her opinion, but I go by the stock market’s opinion. The chart just above hardly backs the case for “wild bullishness,” but if the evidence changes, I hope to be nimble and unprejudiced enough to change with it.
I’m not kidding myself, this is a devilishly difficult market to deal with or analyze. My work shows that we are in a tricky and deceptive bear market. The evidence, as I write, remains bearish. Furthermore, the economic news remains bearish, despite all the public relations efforts to give the news a bullish slant.
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