Bear Cycles Look Like

BEAR CYCLES LOOK LIKE........4/1/08 written many many times re the 200 day MA trend as the indicator as to whether a stock is in its Primary BULL or BEAR trend... it is simply a reflection of what is happening to the FUNDAMENTALS of the stock, by which i mean , that in BULL CYCLES, EARNINGS will be rising,with surprises on the upside... and a RE-RATING occurs on top of the earnings upgrades.... and vice-versa on the BEAR tack.... TECHNICALLY , this can be seen by chart patterns that appear in sequence. Firstly... 1/there is a simple break of the previous UPTREND LINE [ UT] [ which itself , connects the bull cycle of a series of higher lows] 2/ then a DEATH CROSS, where the shorter MA closes below the 200 day... which is still rising, but better if its already flatter by then... 3/ usually [not always] followed by a rally back towards the 200 day.... 4/ then we should see a series of lower lows and lower highs , beneath a falling 200 day.

EX S&P back in '98 to '01 we can see the first 2 negative signals occur in 10/00 1/ break of UPTREND 2/ Death Cross 3/ the rally back to the 200 day that failed...[ green circle] 4/ followed by a series of lower highs and lower lows...

winding forward , we get to see what happened subsequently..... a series of lower lows and lower highs beneath a falling 200 day... due to a DE-RATING....

all this is a prelude to looking at some US sectors[ and Asian co's later ] to see whether they are in a Primary Bull or Bear trend... as the Consumer drives the bulk of the real economy , lets have a look at some of the consumer related indices...

1/ PROPERTY... commentary superflous as it clearly is going throug the sequence outlined on page 1 , above..

2/ providers of the finance for house buyers........

3/ Consumer Finance co's...

4/ RETAILERS..........that sell stuff to consumers.. last night went to new lows in this cycle..

5/ BANKS.... new lows....

6/ Investment banks..... the global liquidity providers....via Derivatives.. still above the support line at 190....but 200 day already falling..... earlier in its Bear cycle than the previous examples....

7/ UBS.... its not just the US banks...

8/ UK's RBS....

9/ JAPANESE banks , been in their BEAR cycle for some time already...

apart from the clever traders , trying to time the occasional rallies, which certainly do occur from time to time, even within primary Bear cycles, medium term investors should probably just stay away from co's that appear to be in their primary bear cycle... again , defined as... a series of lower highs and lower lows below a falling 200 day MA... ASIAN large caps... as Asia is her Primary Bull trend, one shouldn't expect too many co's to be in their Primary Bear Cycle...

the obvious difficulty/problem is 1/ share prices do ALWAYS come back to their 200 day , even in a Primary BULL CYCLE, and often can fall below it, thus triggering worries over whether it is in its start of its bear cycle , just when one should be buying the shares, as they were merely correcting a previous overbought situation... i.e the WHIPSAW... 2/ how useful is the indicator , as once the Bear cycle appears to be a fact , many months and a lot of price erosion would already have occured...? BUT.... as we have seen in the above examples, the Bear Cycle can last for many many more months and stocks can still fall an awfully long way , even after the Death Cross... the co's that are clearly already in their Primary Bear Cycle, which are to be avoided or shorted....esp on any delicious bounce...

CAPITALAND... not sure what to make of this one.... certainly has satisfied the Bear cycle criteria sequence.... but close to v important support level , from which bounces could occur...

NOL … possible early stages of its Bear cycle.. for obvious reasons.. at crucial support right here...

ASCOTT..... following a classic Bear Cycle pattern so far....but oversold...

SIA … Cyclical … fears of US recession Loosing out on China Eastern Deal

KEPLAND

Venture

ASIA..... as a whole, is still in her Primary BULL Cycle.... i.e a series of higher highs and higher lows above its rising 200 day MA... and so far is still in the midst of a typical correction phase , that hasn't even got it back to its 200 day... which means, that if the US financial system doesn't implode and if the US consumer can still muddle along , Asia will once again rebound.... on top of those worries, Asia is not cheap .... and inflation is rising.....