Bear Market Status Avoided... For Now Says Market Timer Frank Kollar
January 25, 2008 (FinancialWire) (By Frank Kollar)
At the correction “closing” lows, reached on Wednesday January 23, the S&P 500 Index (SPX) had locked in a 15.9% loss. The Dow Jones Industrials (DJIA) had a 15.5% loss and the Nasdaq Composite Index (COMPQ) had a 19.8% loss.
So far bear market status, widely considered to be a 20% loss from prior rally highs, has not been reached by the biggest indexes.
Only the Nasdaq 100 Index (NDX) and Russell 2000 Index (RUT) have reached official bear territory with a 20% loss.
Does this mean the worst is over? Is it all bright skies and warm breezes ahead?
Do not lose sight of the reason for the declines. Fed Chief Bernanke has lost credibility, by moving too slowly to reduce interest rates while ample evidence of a looming recession were appearing.
Also the bad news, the anticipation of which sent prices tumbling, has still to occur. What will happen to the market when month after month we see deteriorating economic reports and poor corporate earnings? The sub-prime crisis may be far from over too.
Yes, the market looks nine months ahead. That is very true. But those nine months have not even started yet. Do not expect the market to stage a sustainable advance with so much potentially bad news still to arrive.
The charts show supports were broken that reflect data back to year 2003 and to the bear market before. This means we may yet have, at the least, another wave down before the bottom is reached.
There may be a rally here. It may even last awhile and ease the fears of market participants. But that last wave down, Wave 5 for Elliott Wave enthusiasts, could be a doozy!
Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.
Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.
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