NEW YORK (TheStreet) -- Last month I penned a piece for RealMoneyPro subscribers pointing out that the bull market that has existed since 2009 was most likely at an end. I remained cautiously bullish throughout, because the qualified trends on the intermediate-term time frame have never told us to do otherwise. Well folks, now they have!
Here are those qualified trends for the major market indexes and sectors as they existed on August 7. They have improved slightly on the short-term time frames (as they should), but it hasn't changed the larger picture or probabilities.
Since joining TheStreet and RealMoney team in 2009, I have held steadfast to the idea that we had to trade what was in front of us, and that was a bull market. Despite being a difficult market to trade, I have labored to stay cautiously bullish in order to exploit what was in front of us. I never liked this market because it has been suspect bullish almost the entire way higher, but that's another story for another time.
The bear market is coming! Although it doesn't always happen this way, both the sector and market qualified trends on the intermediate-term time frame transitioned to confirmed bearish. Confirmed bearish trends have a less than 50-50 chance of returning to the bullish trend from which they have fallen.
As I labored to point out in that article, just the fact that the qualified trends had changed didn't mean that it would be straight down from there. In fact, the preliminary statistics I am working on for my next book suggest the odds of retesting a swing-point low in this time frame happening within 5 bars (5 weeks in this case on the intermediate-term basis) is about 40%. Stretch that out to 10 bars and the odds increase to roughly 60%. That, my friends, represents the bounce probabilities. That swing-point low on the S&P 500 is 1249.The chart I showed back then remains as valid today as it did then. The only difference is, now it is probably believable. Here's the original chart.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV