More signs that we've entered a bear market: The downdrafts are growing increasingly predictable, and the swoons no longer give way to quick, complete recoveries. By 'predictable,' we don't mean to imply that one can now short stocks on the close and sleep like a baby, for one cannot. Indeed, since no one knows what will occur on the opening bell, to act as though you do is to subject yourself to open-ended risk. However, we have observed recently that once stocks get a mind to move lower, they move with a relatively high degree of fidelity to our Hidden Pivot targets. The same has always held true when stocks were thrusting in bull markets. The more powerful the bull trend, the easier it was to forecast short- and intermediate-term highs precisely. It's been a long time, though, since we've seen stocks trace out price patterns typical of bear markets. What types of patterns? Using the ABCD pattern that provides the basis for Hidden Pivot analysis, they are patterns in which the C-D 'follow-through' legs typically fail to reach their 'D' targets. That is no longer the case, however, and individual stocks are not only reaching their 'D' targets, they are in many instances exceeding them. Riding Bear Rallies 'Knowing' where the turns are most likely to occur can help us catch powerful bear-market rallies from their inception. And because quite often we are able to predict the turns with a high level of accuracy, we can use very tight stop-losses to limit our risk. It is another trick, however, to attempt trading with the trend, since, in a bear market, that implies shorting correction highs. Such highs tend to be more elusive than downside targets, reason being that 'everyone' is trying to find a good place to get short
LATEST TRADES
