Death Cross


Powell was asked what would prevent a 50 bps move in May.

Powell: “Nothing would prevent May FOMC 50 basis point rate hike.”

One characteristic common to almost all bear markets or bear phases is that once a negative MA crossover has taken place, it remains that way until after the final low is in.

Consequently, if the SPX should quickly regain its 200 day moving average, which currently ties to around 4470, the presumption would be that this may be more a bear phase than a larger/longer bear market.

Should that prove to be the case, most if not all of the downside action may already have taken place. This would imply a bear phase with a multi-month range versus a bear market.

The evidence is not in for those relying solely on price without the benefit of cyclic analysis.

Succinctly, TIME.

My cycle work suggests this is a bear market until proven otherwise.

As well, as shown in yesterday’s report, the historic square-out on the Square of 9 Wheel in early January “proved” by the ensuing authoritative downside price action “proves” the idea of a bear market.

Above, we flagged the importance of the 200 day moving average.

While the SPX closed above its 50 day moving average on the Friday weekly closing basis last week, this is within the context of a Death Cross, where the 50 day ma crosses below the 200 dma.

This occurred last week.

Some may infer that since the SPX continued to rally despite last week’s Death Cross, the market is bullish.

Now I want to take a look at December 2018.

Notice that the market plunged as a Death Cross occurred.

This was one day after the bulls cheered the index reclaiming its 50 day and 200 day moving averages.

So the SPX poked above its 50 and 200 day moving averages in early December 2018 as it stared a Death Cross in the face just as a gorilla rang the doorbell.

In the last two days, the SPX has poked above its 50 and 200 days with a Death Cross on the clock.

With the cluster of multiple cycles due to exert their influence over the next two weeks, it will be interesting to see if a gorilla rings the doorbell.

In sum, a corrective rally has been in place since the February 24 lows… prior to a Trap Door buy setup being triggered one day after our Panic Cycle turning point day, March 14.

This looks like a mirror image foldback of the Trap Door sell signal on January 5.

The SPX swooned after the January 5 Trap Door sell just as it surged following the March 15 Trap Door buy signal.

The implication of the patterns as well as the Death Cross and the comparison to December 2018 is that the aforesaid corrective rally is either over or only days away.

If I am correct, a strong decline is at hand.

Navigating safely around both a cyclical bear phase or a full-fledged bear for stocks and what may prove to be a super-cycle for commodities will be vitally important to protecting your assets… and growing them by capitalizing on the turning points gleaned in our Hit & Run Report.

A full-fledged bear will offer many opportunities, short and long, in the coming three years, for the opportunistic Hit & Run method that will be squandered by the Buy & Hold approach.

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