Is this the 2012 Bear Market? (part 1)

Is this the 2012 Bear Market?

 

What did we just see last week? Was it the start of the 2012 Bear Market, or was it just a really deep pullback in the middle of the cyclical Bull Market that we’ve been in since March 2009? Chances are, if you listen to ten Market pundits, then you’ll get ten different opinions. And that’s not really the point, anyway; listening to others will give you a bias, and you’ll just end up following the herd over the edge yet again. What we believe at here at Trading Concepts is to give you the knowledge so that you can tune out the noise and make your own investing decisions. 

 

I think the best way that we can objectively judge whether a Market is in a Bear Market or not is based on three different types of criteria: 

  • Market Character – how does the Market respond to the usual stimuli? How is it acting?
  • Signals – does it display the usual signals that are associated with Bear Markets?
  • Price Action – does the price action confirm the “Bear”?

Most traders focus on the usual signals that everyone else sees, which does not really provide you with much “edge.”  What you should really be looking for is a set of objective, identifiable criteria that can allow you to confidently go against the grain, if need be, based on the strength of your analysis. Identifying the Bear is like anything else in trading; your objective is to stack up as many edges as possible to place the odds more in your favor then the rest of the herd that’s just watching CNBC. 

In part 2, I’ll go over “Market Character” so you can begin to identify what makes a Bear different from a Bull. 

In your corner…..Doc Severson

About the Author Brian Keith

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