Is an enduring downtrend emerging in the stock market?
'THE CURRENT MARKET ARGUMENT PITS the charts against the cheap, the increasingly worried tape readers who see an enduring downtrend emerging versus the spread-sheet studiers who spy increasing value with every percent decline in the Dow, and contend that stocks are over-anticipating a recession relapse.
The charts, plainly, are delivering cause for concern, a fairly clear downward trend in the major indexes since the April high, and heavier selling on down days than there has been buying on rallies.
The talk of technical risk has been spiced with phrases that seem out of youth adventure fiction, such as the purported 'death cross,' an impending moment when the Standard & Poor's 500's 50-day moving average crosses down below its 200-day average -- a juncture with a somewhat more ambiguous predictive record than its lethal name suggests.
Some, but not nearly all, technicians are either stating that a new bear market is under way or are waiting for a few unmet conditions to kick in before making that call.
One approach to market timing just raised the caution flag. Some advisors watch when the S&P 500 crosses above (a Buy signal) or below (a Sell) its 12-month average at month's end. Last week's June close fell below the average for the first time since July 2009.''