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The Return of The Bear - Part 1

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by Martin Pring -  Jul 6, 2006
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I have taken this concept a step farther by breaking the three cycles into six definable stages since the three markets each have two turning points. The bullish stages have been flagged in Figure 1 with the rectangular boxes. Stages II-IV are bullish for stocks, but when the cycle enters Stage V, it’s time to anticipate a primary trend peak. My consensus model, or “Barometers” are comprised of economic, monetary, and technical indicators monitoring the status of each market, and emphasize whether the background factors are bullish or bearish for a particular market

Figure 2.

As with any technical indicator though, markets don’t always respond to the environment in the expected way. This is especially true for stocks, which are more susceptible to psychological mood swings than the other economically driven markets. The Stock Barometer went bearish in the summer of 2004 (see Chart 7). Since then, the market has rallied of course, but this is not uncommon, as stocks have often eked out a small gain during the months immediately following the bearish signals. However, as long as the Barometer remains in a bearish mode, the overall risk/reward is not favorable, as can be seen with the 1969, 1974, and 1987 periods. (The stock commodity, and bond Barometer, are updated and analyzed in our monthly newsletter, The InterMarket Review. Figure 2 shows our current location within the 6 stages as of the June InterMarket Review.)

Chart 7. Arrows show when the Barometer crosses 50%. See Chart 7A for more detail.

Chart 7A. Arrows show Barometer buy and sell signals.

In the next section we will look at the Monetary Background behind a bear market and Key Intermarket Relationships.


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Comment on this Article

Recent Comments:
hmm, this stuff is good for fuelling the biz I suppose, lines twitchin here, oversold ding dong there etc.. (insert dbp squiggly blue lines off the chart posting , triggering conditioned/reflex action from humans post) Pring seems to be measuring/focusing effect of traders (too slow or hmm presents an image encouraging or an attempt to aid some sort of decision process for the "typical" individual trader but most ,I guess, will not be happy with things deep down.) and not the cause as with...
fxmarkets   08-07-2006 14:44:30
Many years ago I read "Pring on Technical Analysis" when offered an interview at a futures fund having worked at a commodity house via a grad scheme for 3 years and never really looked at a chart. I realised my only hope was to b/s my way into the fund by talking knowledgably about technicals. I read the book prior to interview and It worked. I therefore thank Mr Pring for helping me get started in this business as well as starting me off in a technically focussed direction that has paid...
twalker   07-07-2006 07:21:52
My comment doesn't apply to you Tony ,anyone with less than the price of a bag of sweeties does not need to be concerned with the issues of asset management.
chump   06-07-2006 12:47:51
dbp - Thank you for your comments they are always appreciated, often agreed with, and actioned accordingly. It was not apparent from your post if you considered that the article had direct relevance bearing in mind your method of trading. If you consider that it does it would be interesting to read how you combine it with price/volume. charliechan - I am keen on ta but query the applicable practical value of what is discussed in the article. chump - see my reply to charlie chan. ...
bracke   06-07-2006 12:31:30
Quote: Originally Posted by chump Well if you're any good at what you do you will have built up a reasonable level of asset value unattached to whatever you use for your daily pot. If you wish to keep it the above would be a good place to start. Don't want to divert/hijack this thread, and have no comment to make on Pring's article, but couldn't miss the opportunity of addressing this point of yours chump. Raised...
TheBramble   06-07-2006 12:21:31

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