Not like the current equities market that’s for sure.
Bul markets have a series of unique internal dynamics that drive them along – the most obvious of these is that the stocks within a given index continue to make new highs. These new highs are manifested in the index by it trending up. The chart below is of the S&P500 during its last bull run with its daily new highs and new lows plotted over the top of it.
As you can see the new highs as shown by the blue line are in the ascendency – when you have this sort of behaviour the market is not going down despite what naysayers may call for. The internal structure of the market makes it very hard for the bears to make a case and then prosecute it.
The chart below is of the current state of the S&P500 – you can see that the situation is reversed.
The index has in recent days tried to stage some sort of rally and in the short term it has been successful but it will only continue if the bulls swamp the bears and evidence of this is given by an increasing number of new highs and a decreasing number of new lows. At present this is not the situation the number of new highs has turned down and the number of new lows has turned up. My short-term system has turned bullish on the S&P500 but longer-term systems have not and won’t until the bulls assert themselves more forcefully.
