Putting the Big Bounces into Perspective


Despite a massive advance the last six weeks, the bulk of the evidence indicates that we are still in a bear market environment. The advance off the March low, while impressive on its own, still pales in comparison to the prior decline. The S&P 500 SPDR retraced around 61.8% of this decline and the Russell 2000 ETF retraced just over 50%. Such retracements are still normal for counter-trend bounces.

Consider the following. SPY, the S&P 500 EW ETF, the S&P MidCap 400 SPDR, the S&P SmallCap 600 SPDR and the Russell 2000 ETF are all below their falling 200-day SMAs. Nine of the eleven sector SPDRs are also below their 200-day SMAs. The Nasdaq 100 ETF, Technology SPDR and Healthcare SPDR are above their 200-day SMAs and leading, but they cannot do it alone. Moreover, not one index or sector recorded a 52-week high this month.

Overall, most bounces retraced a normal amount, most equity-related ETFs are still below their falling 200-day SMAs and not one index or sector ETF hit a new high. This is not the stuff of bull markets. This weekend at, I covered the bear market bounces in 1981, 2001-2002 and 2008 in a video. What can we learn from these bounces and apply to the current bounce? Subscribe today for immediate access.

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Arthur Hill, CMT

Chief Technical Strategist,

Author, Define the Trend and Trade the Trend

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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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