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April 02, 2009

What Does the Bottom of a Bear Market Look Like? ...
by Marty Chenard

Today, we posted our second study on "How a Bear Market ends".

The first was a study of what the Institutional Investors did relative to "Accumulation" and the end of the 2002-2003 Bear Market.

We just published a second study that looks at the 2002-2003 and the current behavior of the market.

Below is a study of the 2001 to 2003 time period where the last Bull Market finally bottomed out and entered a new Bull Market.

The focus of this particular study is to observe "what a bottoming process" looks like in terms of "market strength" and "market lows".

Let's first focus on the NYA price chart below. Notice that the NYA Index made a low, followed by a lower/low ... see the blue arrows.

After that, the NYA initiated a RETEST OF THE LOWS before the final bottom could set in. *We are now at the point of a rise after this market's second low which was also a lower/low. (The transition to a Bull Market did NOT occur until after a retest of the lows, AND an upside break of the Bear Market's resistance line.)

With that NYA Index observance in place, let us next look at our C-RSI behavior during the 2002-2003 Bean Market end.

Note the red arrows and how that created a C-RSI resistance during the Bear Market (the C-RSI is our zero-based Relative Strength Indicator).

During the bottoming process of the last Bear Market, the Bear did not die until the NYA's resistance was broken to the upside WITH the C-RSI subsequently breaking above the Bear Market resistance line in red. That was the confirmation that the market had "the strength" to continue what the break out of the NYA's resistance line had started.

If fairness to our paid subscribers, we won't post the whole study, but ... we will say that that the above criteria for "a Bear Market end" has not been met yet.

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Marty Chenard
StockTiming.com
Asheville, NC 28805
Tel: 828-296-1200

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