Monday, January 25, 2016

PSI Portugal Daily Chart Cyclical Bear Market

There is lots of talk about bear markets in the media this year as stocks tumble lower. From a peak in an index or stock, the media refers to a -10% move lower as a "correction" and a -20% move lower is dubbed a "bear market." There is nothing official about these designations in fact you will be hard-pressed to find the guidelines called out anywhere in economics or trading literature. The percentage designations are not a good gauge of whether an index, sector or stock is in a cyclical bull or cyclical bear market; take those price levels with a grain of salt. Keystone highlights these -10% and -20% levels as they occur since the main stream business media makes a big deal of the levels.

far more useful tool in distinguishing an ongoing cyclical (days, weeks, months) bull market versus a cyclical bear market is the 150-day MA slope. If the 150-day moving average is sloping higher than the stock is in a cyclical bull market uptrend. If the 150-day MA is sloping downward, negatively, the stock is in a cyclical bear market pattern. The beauty of moving averages is that they smooth out the erratic price action especially in times of market inflection points and maximum chaos.

Thus, the PSI Index is in a cyclical bear market since August 2015. The PSI peaked at 7800-ish in March 2014, and a -10% correction is 7020 and a -20% bear market (by the media's metrics) is 6240. Prices collapse far below these targets but recovers into the April 2015 top at 6350. A -10% correction from 6350 is 5715 and a -20% bear market from 6350 is 5080. Portugal is a very ill market. Using the more important 150-day MA guideline, the key PSI Index, the best measure of Portuguese stocks, remains in a bear market (for days, weeks perhaps months ahead) until the 150-day MA slopes upwards again. 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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