What are the most reliable technical signals that the bear market is over?
During January and October 2022, the S&P posted a 27.2% fall in value and entered bear territory.
The technical definition of a bear market is a 20% decline in prices or more from its most recent highs.
But the 10-month SMA, one of the most reliable technical signals bear market is over and flashing green for bulls.
“The technical definition of a bear market is a 20% decline in prices or more from its most recent highs”
WEALTH TRAINING COMPANY
What is the 10-month SMA?
A 10-period simple moving average uses the closing price of the last 10 periods, then it adds the sum of these ten numbers and divides it by 10 to calculate the average closing price of the last 10 periods. New periods are then added to the calculation, while the oldest period is removed from the calculation.
Is the 10-month SMA reliable for signaling the bear market is over?
This technical indicator tends to be overlooked by traders, even though the 10-month SMA has a reliable track record of predicting the end of bear markets since the 1960s.
Historical data indicates that the 10 Month SMA has consistently marked bear market lows in the S&P 500 every time since 1960 when the price of the index closed above the 10 Month SMA for two consecutive months.
In the first quarter of 2023, 10 Month SMA technical signals bear market is over.
“the 10-month SMA has a reliable track record of predicting the end of bear markets since the 1960s”
WEALTH TRAINING COMPANY
So following a massive sell-off in stocks in 2022, the rally into year-end resulted in the index’s closing price being 4066 in January and 3958 in February of 2023. Both were above the 10 Month SMA at their respective month ends.
The 10 Month’s SMA remains reliable, with the stock trading above 2022 lows.
“Bear markets end when central bank liquidity has fallen to a trough. Bull markets peak with peak central bank liquidity”
– Wealth Training Company
Cycles indicate that the bear market is over?
Bear markets end when central bank liquidity has fallen to a trough. Bull markets peak with peak central bank liquidity.
Asset prices are a function of central bank liquidity in the current era of managed central bank markets, where price discovery and fundamentals have taken a back seat. If you know where central banks want asset prices to be and can gauge the limitations of monetary policy, your probability of accurately forecasting asset prices improves.
Central banks abandon tightening, the inflation fight, when they see a systemic crisis unfolding, and that boundary is here with a handful of bank runs. In a previous article it mentions that the Fed is a banking cartel and is likely to pivot when the banks squeal.
Moreover, the investor sentiment cycle remains depressed, often the best time to acquire assets at a deep discount.
So the technical signals bear market is over is green for bulls, but the world order cycle, geopolitics, and the ongoing war in Europe is still flashing amber.
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