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Tuesday, July 01, 2008

Bob Brinker's Bear Market Definition

Bob Brinker defines a bear market as any move 20% off the peak on a closing basis. That is Brinker's definition.

The S&P500 all time record high was set last October at 1565.15. A 20% off bear market, according to Bob Brinker, would be any close at or below 1252.12. I show both these levels on the chart of the S&P500 closing values along with Bob Brinker's two "all in" buy signals where he recommended his readers lump sum any new money into the market.

[ALL charts are clickable to view them in full size.]

The official definition of a bear market on pg 745 and 747 of "Technical Analysis of Stock Trends" by Robert D. Edwards and John Magee doesn't list a specific percentage but plenty of talk about bull markets end when the "public" tries to profit from a rising market. I can't think of a better example of this distribution phase when a well known National radio host (Brinker) told his readers a secular bear market he told them they were in all the way up from the 2002 bottom ended the year before (in Summer 2006)... nearly to the day the markets peaked!I like to use intraday trading numbers for my market analysis since those show prices traders can actually buy and sell rather than what the very last trade of the day went off at, a number that is often manipulated.

This next chart shows we've already had a 20% bear market on an intraday basis.

The Good news in the chart is it clearly shows we are testing those March 2008 bear market lows now on what looks to be lower volume. Of course, the March low was at lower volume than the Januarly low, so the hope is we are slowly exhausting the sellers.

What I am hoping we are seeing now is the washout phase discussed in "Technical Analysis of Stock Trends" that ends bear markets.

Watch this chart to see intraday trading as it will update in real time if you return here.

Note: Bob Brinker has been FULLY INVESTED in all his model portfolios since March 2003. He has advised his subscribers to dollar cost average new money into the market except for special "all in" buy levels in the mid 1400s and again in the low 1300s that have not worked out too well. See Bob Brinker's Asset Allocation History.

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