A Long Term Bearish View

For the longer term investors out there - and there are a lot of people who wish they could be long term but don't dare do it - we have some charts this week that may serve to interest you. They may not make you happy, however.

As you all know, my proprietary indicator, the "MRO" or Market Reversal Oscillator may be used with data of any periodicity - daily closes, weekly closes or monthly closes. I combine the MRO with a 5 period MA and the common %R indicator to provide both buy and sell points for anything that returns a high, low and close.

This time we look at the long end of the period, using monthly data and the scary picture it paints.

First, lets look at VTI (which I use as the broadest general market tradable ETF) plotted on a monthly basis.



This shows the top of the Bull Market that ended back in November of 2007, the following start of a secular Bear Market and the correction to that Bear that started in late March of 2009. As of today, I got a valid Sell on this correction which I think will start a move to attempt to take out the lows of the last correction (i.e. the next leg down of what may prove to be a Super Bear Market, the bottom of which we have yet to see).

Looking at any broad market indicator - QQQQ, DIA, etc. tells the same exact story.

To verify this somewhat, I ran a few contra-stock ETF's to see what they were teling us in the long scheme of things.

Here's a DOG for you - no leash, no muzzle - just fangs barred. The next two stocks are displayed as weekly charts as the data on them is limited.




The MRO provided a long term BUY on this Bear loving ETF the first week of May and the stock is making a run at to see if it can better the whipsaw high back in February. I'll be it does.

Next, the same Bearish stock for the Nasdaq, PSQ.



This stock is showing much more strength to the upside than it did back in February and the MRO has just gone below zero - a very bullish situation in the intermediate term (bullish for the bear, that is).

To sum up, when you review VTI plotted with monthly data and hence quite a long term outlook and prediction, note that it only gives a signal every few years and is not to be ignored. If you make note of the high/low range of this chart (i.e. the high and low for the month) you can see where shorter term traders make their money trading within the high/low ranges. That's where I usually dwell as do most traders.

In this case, however, as of today, yours truly is increasing his defensive stance and I'm taking a position of extreme caution on any long positions within the general market.