Wednesday, September 2, 2015

NYA NYSE Composite Weekly Chart 40-Week MA Cross Cyclical Bear Market

The NYA 40-week MA cross is a key Keystone cyclical market signal. The NYA is under the 40-week MA signaling a cyclical bear market in play for the intermediate term for weeks and months ahead as long as price remains under the 40-wk MA. The chart shows the cyclical bull market driving higher to the triple top in 2011 and August 2011 waterfall crash when markets fell into a cyclical bear. In early 2012, the bulls were celebrating again and after a test in May-June 2012, the bulls verified that they will wear the pants going forward and the cyclical bull continued into this year's top fueled by Fed, ECB and BOJ easy money wine.

The party is over. The only question is how long will the cyclical bear growl? A few weeks? A few months? Perhaps for the next couple years? The most reliable stock cycle is the 18-year cycle which was a secular bear to August 1982 then a secular bull 1982 to 2000, then a secular bear 2000 to 2018 (now). It is very common to have huge intermediate rallies in a secular bear such as 2003-2007 and 2009-2015. Since the secular bear cycle will revert into a secular bull in 2018 and beyond (2018-2036), the bears may extract a huge amount of flesh from the market over the next three years.

When stocks catapult higher in the 2020's in the secular bull cycle it will likely be a result of excessive inflation and hyperinflation. The Dow will launch to 30K, SPX 3K and higher, gold to 3 or 4K or higher, all assets will inflate in the 2020's as the flood of money gains velocity in markets from say 2018 and beyond (remember, however, that the drop in the dollars value will nullify much of the real gains). In the meantime, say over the next couple years or so, disinflation and deflation will likely rule the roost.

The red lines show the overbot conditions, negative divergence and ominous rising wedge pattern that forecasted the market top. Keystone described the action in real time this year and used the monthly charts to call the top in the stock market which occurred as predicted. The collapses from rising wedges can be quite dramatic as the chart shows. The indicators remain weak and bleak wanting lower lows in price for the weeks ahead after any bounce occurs. Stochastics are oversold and positively diverged which will create a bounce for price in the near term.

The bears are running the show now. It was a long 6-1/2 year rally fueled by central banker money printing but the party is over, the booze is gone and people that overindulged are puking in the front yard. The bears rule the markets as long as the NYA stays under the 40-week MA. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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