The following is an article from Seeking Alpha which describes some great tools we can use to decipher macro-market action.
Here is an excerpt, and below are some graphs I made to help demonstrate.
http://seekingalpha.com/article/297743-updating-the-definition-of-a-bear-market
"A more accurate bear market reading can be obtained from using the 50-day and 325-day moving averages (or 10-week and 65-week moving averages). The S&P 500 and the Russell 2000 made the 50-day, 325-day cross in mid-September, but had already made the 10-week, 65-week cross by the beginning of the month."
The take-home is this: "Moving averages [50-day and 325-day], volatility and technical indicators are all indicating that a bear market started in the U.S. somewhere between late July and mid-September 2011. This bear will not end until the 10-week moving averages cross back above their respective 65-week moving averages, volatility calms down, and DMI buy signals are given on the weekly charts."
Here are three links to explain some of the concepts in the article.
Negative Directional Indicator
Positive Directional Indicator
ADX Trend Indicator
Chart 1 - S&P500 - Explanation: The S&P has been volatile (look at the price differences between opens and closes), it has been trading below its 50 day and 325 day moving averages since August, and the downward trend is gaining strength (black line showing overall trend strength, with a continuously falling green line and a rising red line). This chart shows that the 50 day moving average crossed the 325 day moving average at the beginning of September. Click the picture to enlarge it to full size.
The Second chart is silver. I've been following Silver, so I thought I'd comment. Silver's Price has been volatile, though not to the extent of the S&P 500. Silver crossed its 50 day moving average and has been trading below it since mid-September, and it crossed its 325 day moving average at the end of September, and has basically traded around it since. I can't rule out a long-term bear market in silver at this point, but I don't know enough to say for sure. In any case, it doesn't look pretty. The ADX indicates that silver's upward trend began losing strength in May 2011, and a clear downward trend started forming in mid-July. The very clear red line crossing the green line at the top of the chart signals that a new, stronger trend down has started as of September 2011. The black ADX line confirms that this downward trend is strong as it has almost gone parabolic from around 9 to over 34. If we continue to see the +DI fall or stay flat and the -DI gain, and if the ADX rises at the same time, we'll know that a strong bear market in Silver is definitely forming.
Click on the image to enlarge.
Disclosure: none.
Here is an excerpt, and below are some graphs I made to help demonstrate.
http://seekingalpha.com/article/297743-updating-the-definition-of-a-bear-market
"A more accurate bear market reading can be obtained from using the 50-day and 325-day moving averages (or 10-week and 65-week moving averages). The S&P 500 and the Russell 2000 made the 50-day, 325-day cross in mid-September, but had already made the 10-week, 65-week cross by the beginning of the month."
The take-home is this: "Moving averages [50-day and 325-day], volatility and technical indicators are all indicating that a bear market started in the U.S. somewhere between late July and mid-September 2011. This bear will not end until the 10-week moving averages cross back above their respective 65-week moving averages, volatility calms down, and DMI buy signals are given on the weekly charts."
Here are three links to explain some of the concepts in the article.
Negative Directional Indicator
Positive Directional Indicator
ADX Trend Indicator
Chart 1 - S&P500 - Explanation: The S&P has been volatile (look at the price differences between opens and closes), it has been trading below its 50 day and 325 day moving averages since August, and the downward trend is gaining strength (black line showing overall trend strength, with a continuously falling green line and a rising red line). This chart shows that the 50 day moving average crossed the 325 day moving average at the beginning of September. Click the picture to enlarge it to full size.
The Second chart is silver. I've been following Silver, so I thought I'd comment. Silver's Price has been volatile, though not to the extent of the S&P 500. Silver crossed its 50 day moving average and has been trading below it since mid-September, and it crossed its 325 day moving average at the end of September, and has basically traded around it since. I can't rule out a long-term bear market in silver at this point, but I don't know enough to say for sure. In any case, it doesn't look pretty. The ADX indicates that silver's upward trend began losing strength in May 2011, and a clear downward trend started forming in mid-July. The very clear red line crossing the green line at the top of the chart signals that a new, stronger trend down has started as of September 2011. The black ADX line confirms that this downward trend is strong as it has almost gone parabolic from around 9 to over 34. If we continue to see the +DI fall or stay flat and the -DI gain, and if the ADX rises at the same time, we'll know that a strong bear market in Silver is definitely forming.
Click on the image to enlarge.
Disclosure: none.
