Is A Bear Market Forming? Pt II

From today's WSJ:

Investors acknowledged the grim reality beginning in mid-May. That is when the Dow Jones Industrial Average began its march downward, ending the quarter (including Monday's slim 3.50-point gain) with an overall loss of 912.88 points, or 7.4%, at 11350.01 -- and perilously close to the 20% decline from a recent high that is considered the start of a bear market.

It was the third straight quarterly decline and the worst second quarter since 2002.

In each of the final two trading sessions of the quarter, the Dow industrials tipped into bear-market territory during the day but closed just shy of the mark. The Dow industrials have fallen 19.9% from their October 2007 record, so any coming session with a loss could mark the official "bear" for stocks.

The worst-performing stocks reflected the credit crisis and its implications for consumer spending. Financials led the way down as banks big and small took write-downs and reported disappointing earnings. Dow component American International Group Inc. was off about 39% in the quarter, and Bank of America Corp. fell 37%. The Dow Jones Wilshire Bank Index fell nearly 26%.

But the biggest loser among the Dow industrials for the quarter was auto maker General Motors Corp., which dropped about 40%. Of 30 Dow components, 24 ended the quarter in the red. The few bright spots included Exxon Mobil Corp. and Chevron Corp., which rose as crude-oil prices soared 38% to more than $140 a barrel.

Let's look at some of the specific sectors and stocks mentioned in the article



With the XLFs, notice the following:

-- The index is down 44.8% in the last year

-- Prices are below the 200 day SMA

-- Prices are below all the SMAs

-- The shorter SMAs are below the longer SMAs

-- All the SMAs are headed lower



For the regional bank ETF, notice the following

-- The index is down 42.5% in the last year

-- Prices are below the 200 day SMA

-- Prices are below all the SMAs

-- The shorter SMAs are below the longer SMAs

-- All the SMAs are headed lower



-- The stock is down 62.2% in the last year

-- Prices are below the 200 day SMA

-- Prices are below all the SMAs

-- The shorter SMAs are below the longer SMAs

-- All the SMAs are headed lower



-- The stock is down 69.7% in the last year

-- Prices are below the 200 day SMA

-- Prices are below all the SMAs

-- The shorter SMAs are below the longer SMAs

-- All the SMAs are headed lower

All of these charts are bear market charts. These are terrible charts unless you are shorting the market.

I highlighted some of these points and added others in this article from yesterday.