Leaders Index 8-26-15

A lot seems to have happened while I was away. For almost a year the major averages have been in a trendless trading range with no moves of any substance in either direction. This is the worst case scenario for any trend following trading system like canslim. It seems we have broken that trading range to the downside. There were large losses in all the major averages and leading growth stocks. There was a decline in the major averages that took them past a 10% decline for the first time in four years. The charts of both the major averages and the leaders index are disasters. All the major averages are well below their 200dma’s and the 50dma’s have all turned down. The 200dma’s have flattened out or rolled over, very negative signs. Even today’s snapback action in the major averages are unimpressive in relation to the recent declines. I would not be surprised is they rallied back to resistance at their respective 200dma’s, but that would seem to be more of a shorting opportunity. It looks to me like the cyclical bull market that began in March 2009 is finally over and we have entered a new bear market. The leaders index tagged it’s 200dma, very serious for quality growth stocks that are usually considered broken when they break their 50dma’s. The wild card now is the Fed. One of it’s members said today that a rate hike could be delayed and that triggered a big up move. Much of the strong gains late in the session appear to be short covering. The Fed could announce that there will be no rate increases this year or even a new round of QE in an effort to get the market up, but I think the effects would be short lived and would provide more of a shorting opportunity. I have learned over a long career in trading that when I have gotten hurt it has been because I was in the market when I should not have been. There will be a lot of volatility in the near future but I think we have much further to go in this bear market. Jerry