Monday, August 17, 2015

Possibility of bear market has started

Chinese currency devaluation

Those focusing their attention then solely upon the Renminbi/US Dollar rate shall miss what is really going on: a veritable currency war between China and Japan. This ‘war' is only now a goodly sized skirmish. It very likely shall become much, much worse over time.

Overall market health

One by one the markets are turning downward through important moving averages signaling that the present downturn is more than a mere bout of profit taking. We do indeed find it disconcertingly bearish when the 50 day moving average falls downward through the same market's 200 day moving average: the so-called "Death Cross." We find it disconcertingly bearish when the market falls below its own 200 day moving average and we find it disconcertingly bearish when the broader moving averages are themselves turning downward.

We've been unwilling to make that case [of a real Bear market] heretofore, although we feared that that was precisely what has been developing, because every time it appeared that a potential interim top was forming the markets would right themselves; dust themselves off; look around; see that the economic coast was still clear and head higher once again. But this time the market appears staggered; it is not dusting itself off, and rather than leaping to its feet to begin the fight anew it is staggering to one knee, bloodied and exhausted and looking for the referee to stop the fight.