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Posts Tagged ‘shorting in a bear market’

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Second Failure of 50 Day Moving Average, Possible Shorting Opportunity

In Market Analysis on June 21, 2010 at 6:31 pm

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There are key points and days to consider heavily when following markets and deciding which direction to play.  If you study charts you are able to see patterns that repeat themselves over and over again.

One key shorting opportunity that I have seen before major market declines is the second failure of the 50 day moving average.  Today’s nasty reversal where it closed down after being up for most of the day fits this criteria especially when it coincides with the failure of the 50 day moving average.

The volume was above average and this leads me to once again be bearish on the market.  Now is the time to short or buy inverse etf’s such as REW or SH to protect against another decline.  It is not wise to be long this market.  Trailing stops should be monitored closely.  Now is the time to short not when the market reaches new lows.

Gold mining stocks will be monitored closely.

Stay tuned.

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Three Failed Attempts to Regain 200 Day Moving Average, Buyers Beware!

In Market Analysis on June 15, 2010 at 12:39 am

In baseball if you swing and miss three times then you are out.  On a chart if you see three failed attempts to break resistance…get out or short.

Each time the SP5oo tries to regain the 200 day moving average it fails and it is immediately hit with selling.  Sellers are in control and the market is still in correction mode.

Today Moody’s downgraded Greece’s debt which caused the market to give back early leads.  The chart shows a picture of a move up to the 200 day on low volume.  This means there is very little buying going on.  In order for me to gain confidence in the markets I need to see a break through major resistance levels with conviction and that moment is not apparent yet.

Quite contrary three failed attempts to regain major support has failed.  This causes me great concern because in a bull market the 200 day acts as support.  In this case it is acting as resistance, which is typical of bear markets..buyers beware!

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Transportation Average Falls Below 200 Day Moving Average, Confirms Bear Trend

In Market Analysis on June 8, 2010 at 8:40 am

On May 28th I wrote to subscribers to monitor the Dow Jones Transportation Average for failure at the 50 day or a break below the 200 day moving average.  If any of these two signals occur then this will confirm we are changing trends and will be followed by a bear market where we could have a major retracement of 2009′s impressive rally.

The Dow Jones Transportation Average failed at the 20 day and yesterday broke the 200 day with strong downside volume.  The bears are in charge and I hope all subscribers are in defensive mode with inverse etf’s and gold and silver stocks.