The bear market may already be over as the broad market shows more signs of strength than the S&P 500.[0] In order to ascertain whether the surge in prices is sustainable, and thus the bear market abates, a retreat to the former downtrend line that is held is essential. Making this correction would have multiple benefits, like reducing the amount of buying, converting prior resistance into support, and enabling traders who had bet the market would go down to back a rising trend.[1] If the pullback to support can be sustained, the last element of the puzzle will be a breach of the highest point of the week, which will indicate that the uptrend will continue.[2] A target of 4300-4400 should be set.[2]
In this article, we will explore the top indicators to look out for to determine if the bear market is coming to an end. To confirm this, a pullback to the previous downtrend line that holds is crucial. Making this correction would have multiple benefits, like reducing the amount of buying, converting prior resistance into support, and enabling traders who had bet the market would go down to back a rising trend.[1] If the pullback to support can be sustained, the last element of the puzzle will be a breach of the highest point of the week, which will indicate that the uptrend will continue.[2] A target of 4300-4400 should be set.[2]
The market correction has started and the ongoing battle between bullish technical improvements and bearish fundamentals is playing out.[1] For the bulls to maintain dominance, the support level must be sustained.[2] If not, the bears will take back the story again.[2] At present, indications of an increase in stock market risk are pointing to a bullish trend.[2] However, a set of rules must be followed to navigate whatever happens next.[2]
If the break is BELOW the downtrend line and the point where the 50- and 200-DMA intersect, it would suggest that the breakout was only a false signal.[1] It is likely that the bear market will remain in place and retest the lows of last year.[2]
As a contrarian investor, excesses are created when everyone is investing in the same direction.[3] In January 2022, when the stock market was at its highest, there was a great deal of optimism, and no one expected to see a 20% decrease.[1] Sam Stovall, the investment strategist for Standard & Poor’s, once stated that everyone expects the Fed to cut and politicians to panic via more stimulus checks, rebates, and debt forgiveness, at the first blush of recession.[4]
0. “Opportunities for investors in this bear market” Daily Herald, 5 Feb. 2023, https://www.dailyherald.com/business/20230205/opportunities-for-investors-in-this-bear-market
1. “The Correction May Have Started, Will Bulls Remain In Control?” Real Investment Advice, 14 Feb. 2023, https://realinvestmentadvice.com/the-correction-has-started-but-will-the-bulls-remain-in-control
2. “Bullish Signals. Bearish Outlooks. – RIA” Real Investment Advice, 11 Feb. 2023, https://realinvestmentadvice.com/bullish-signals-bearish-outlooks/
3. “The Correction May Have Started, Will Bulls Remain In Control?” Seeking Alpha, 15 Feb. 2023, https://seekingalpha.com/article/4578356-the-correction-may-have-started-will-bulls-remain-in-control
4. “Here’s what needs to happen for one of Wall Street’s biggest bears to flip bullish and be won over by the stock market” Yahoo Canada Finance, 12 Feb. 2023, https://ca.finance.yahoo.com/news/heres-needs-happen-one-wall-134500507.html