31 Jul 2015 - Higher Highs In A Bear Market?

It's normal to think that "Bear Markets" are only down trending.  This depends on when you consider a bear market to start, and it also depends on which indicators you use.  There is something that is being said by a stock or market when divergence occur.  The way I see it is that sentiments are getting weak or investors are having less confidence in the stocks as prices move higher.  This could extend for a period of time, but rather than wondering when it would happen it is better to see it as an early opportunity to exit which can setup for another buying opportunity in the future.  We do not know how low prices will go either when it happens but indicators usually creates a "reset" environment and shows how intense the previous divergences are. 

Why do I mention divergences?  It's warning us of something at the moment and based on my indicators the bearish sentiment has been triggered while prices are staying strong at support.  So for the next few weeks to months, this support should be watched carefully.  The 200 day MA is now becoming a very critical psychological line in the sand.  Things to watch for are;

-Divergences in indicator vs. price
-Momentum of the price vs. indicator
 (Positive - Indicators makes a fast move lower while price stays relatively the same).
 (Negative - Indicators makes a move lower but prices outpacing the indicator).
-Daily Lower Lows or Higher Lows using indicators that have reached the same level previously.

Based on a "DAILY" chart above we can see that the sentiments has changed from bullish to bearish, but not many chartists see it this simple.  This is a simple analysis and the only execution you need is if the bearishness is broken by price higher or continued by price lower.  Bearishness continuation needs for price to exceed previous lows if signals resets lower.  If not we can consider price being supported strongly.

The Monthly signals have printed and although the DOW is bearish, the SPX seems to buck that trend.  But viewed on a Daily basis we can see that even with a bullish close, the sentiments are bearish.

So in conclusion, a bearish mindset needs to be the priority due to a higher risk for surprises and acceleration to the downside.

MT: UP
ST: UP
PA: NA