FTSE London 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.

A 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 UK FTSE Index is in a cyclical bear market since August 2015. The FTSE peaked at 7130-ish in April 2015, and a -10% correction is 6417 and a -20% bear market (by the media's metrics) is 5704. Price tapped on the 5700 level last week. Using the more important 150-day MA guideline, the key FTSE Index, the measure of UK 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.