Here’s the Bounce… Is the REAL Collapse Just Around the Corner?

• Here’s the Bounce… Is the REAL Collapse Just Around the Corner?
  by Phoenix Capital Research, http://www.zerohedge.com/  
  When it comes to analyzing long-term trends, the 10-month moving average has been a great metric for charting long-term bull market vs. bear market changes.
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  Generally speaking (there are of course exceptions) when stocks break above this line, they’re in a bull market. When they break below it, they’re entering a bear market. However, when you’re transitioning from a bull to a bear market, stocks usually follow a specific pattern in which there is a bounce to “kiss” former support as the bulls attempt to reignite the lost momentum.
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  It is only after the “kiss” (the bulls fail) that the real collapse begins. Again, the pattern is:
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  1)   The initial drop
  2)   The rally to “kiss” former support
  3)   The REAL drop
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  Here’s how it played out during the last transition to a bear market (’07 to ’08). (top of post)
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  As you can see, throughout the bull market from 2003 to 2007, stocks remained above the 10-month moving average. Indeed, often this line served as key support when stocks began to lose momentum.
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  However, once the market peaked in 2007, it broke below the 10-month moving average with conviction. If then followed the pattern I’ve outlined, rallying to “kiss” the 10-month moving average. And after the “kiss” came the real collapse.
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  Now let’s look at the current bull market begun 2009.
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  read more.

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