subject: How to Break Bad Habits in the Market [print this page] If you are not convinced at this point that we are in a downtrend, there is really nothing I can do about it. I have always tried to stay on trend with my investments and hate that we are entering a new phase of the bear market, but the technicals don't lie. How low we go is anyone's guess but I want you to take a look at the chart of the S&P 500 over the last three years.
First, put 1200 or higher on the S&P out of your mind, it just isn't in the cards for the foreseeable future. I don't care what the CNBC morons are saying. They haven't got a clue. Not sure what they're looking at and really don't care.
The next level to worry about is 890. That was the last big breakout upward after the first significant pullback from the March 09 low. This provides key support and will take awhile to breach if it does not hold. I don't see us just blasting through this level. It could take weeks if not months. Look at how well 1040 is holding now and it is not as significant as 890.
I am not going to talk about the 667 level because we are a long way from it and we will bounce around 1040, 1010 and 890 dozens of times.
What I do want you to pay particular attention to is the MACD and the VIX numbers. The MACD is a momentum indicator and the VIX measures volatility. The last time the market dropped this much, the MACD was pointing down and the VIX dropped was just before the crash started in the Fall of 08. In fact that slide began in May and so did this one.
Is it possible for this pattern to repeat itself? You bet your butt it is. The markets are human driven, and human beings have the almost impossible task of breaking bad habits. Good trading.
