The daily price scribbles can be very confusing and can keep us away from seeing the big picture. Therefore, we like to simple “delete” price and look at what the simple moving averages tell us. The 50d and 200d SMA are great for the intermediate and long term and if we apply a few very simple rules we can very easily determine when the market is in a bear or a bull markets: see Figure 1 below.
Figure 1. 50d and 200d SMA chart; to help determine bull and bear markets.
As we can observe, bear markets are when the 50d is below the 200d SMA and may swing up sometimes a bit, but remains below the 200d SMA, while the latter continuously moves down. Bull markets are simple vice versa.
Since 1980, that’s 36yrs of data, we find 4 short bear markets (red “b”) and 2 longer bear markets (red “bear”) and 7 bull markets (green “bull”). Currently the market is in a bull since March of this year.
Hence, although this chart is not predictive, it says we are currently NOT in a bear market, but in a bull, and the current on going correction will most likely resolve to the upside towards our longer standing target of SPX2350.