I'm Baaaaaaaaaccccckkkkk -- Or, Last Week In Review

Well -- I'm back. Bonddad and the future Mr$. Bonddad went on a cruise last week and had a ball. We swam with dolphins, went sea kayaking in the Cayman Islands and saw the ruins at Tulum. I didn't read any financial news for a week -- and that was great. I finally broke down and read my email on Saturday. I had 625 messages and 4 were important. That's about the same ratio as I get in my mailbox.

So -- where are the markets after a week?

Let's start with the long term view and work our way towards the short-term view.



This is the chart that led me to state we're now in a bear market. The SPYs have broken through two key long-term support levels. Remember -- the longer the support or trend, the more important the break of the trend. While the markets rallied last week I will show below that this is a bear market rally.



This is a one year chart of the SPYs. Notice the clear break-through of the long-term trend lines. Also note:

-- Prices bounced off the upper trend line four times before falling through. That means the trend line was very important to the market and provided key technical support for the last year.

-- The index is 6% below the 200 day moving average.

-- The 10, 20 and 50 day SMAs are all headed lower.

-- Prices are above the 10 and 20 day SMAs which is a short term positive.



Above is a six month chart of the SPYs. Notice the index is clearly in a down, up, down up pattern. Also notice the market is making lower lows and lower highs, another sign of a bear market.



Now we're into last weeks action. I have been arguing that the market would rebound from its recent lows, largely based on the the Fed's actions. Over the last two weeks, we've seen the Fed lower rates by 125 basis points. That's a huge slashing of rates, and it has led the bulls to argue the Fed's actions would prevent a recession. This is the primary reason we saw the markets rally last week. However, notice we're still within the Fibonacci retracement ranges, indicating we're still well within the possibility of a retracement rally.

In addition, ask yourself a basic question: what makes the stock market go up? Earnings! When to earnings increase? When the economy is growing! Is the economy growing now? Not on your life!

I'll be looking at the other averages as the day progresses.