February 15th, 2008
At the current rate of it’s descent of about .9/day, the 180-day moving average will cross down through the 300-day moving average and the MTI will morph into a clear bear market configuration within (300-180-90-60 day MAs with Index below all) 11 days. This is the value of all the variables as of today’s close:
This bearish arrangement has occurred 51 times over the past 44 years and stayed under the spell of this configuration for 916 trading sessions or an average of 18 days. Most of those runs were during the secular bear market of the 1970’s and the tech crash of 2001-03.
One of the largest was during the crash of 1974 when the market declined 23% over 84 trading days! Another even more devastating period was the crash of 2002 when the market declined 11% over 34 trading days.
Unless there’s a significant recovery of 6% to 1450 during the next two weeks which doesn’t seem likely, history says we’ll be entering an new extended, step downward leg of this bear market.
If you haven’t already done so, head for shelter.