Here's one thing we know for a fact about the market:
In order to have a bear market, or a correction of any kind, you need the prices of stocks to be falling.
Fact.
Without the prices of stocks falling, you cannot possibly have a bear market, or any kind of correction at all.
That's just how math works.
So if one would take the time to count how many stocks are actually going down in price, one would have a better understanding as to whether or not stocks are correcting.
See how that works?
And while the list of new 52-week lows is still nonexistent, that doesn't mean stock prices aren't falling. So we want to look at shorter-term time horizons to see if we're seeing an increase in the number of stocks falling in price.
Currently, we are not seeing any expansion at all in the number of stocks whose prices are falling. Here are Large-caps, Mid-caps and Small-caps all within the same range of new lows that they've been in throughout this bull market:
We'll know if we're in a correction. You'll be able to just count and see for yourself.
And you'll see the list of new 1-month lows expanding, new 3-month lows, and then new 6-month lows, before you ultimately see those big surges in new 12-month lows.
It's a process, not a single event.
You'll see breadth deterioration, and then well after the fact, they'll announce that stocks are in what gossip columnists call, "Correction Territory". The worst offenders wait even longer and then proclaim that stocks are in "Bear Market Territory".
These are all made up fairytales about arbitrary numbers without any statistical significance whatsoever. It just gives the gossip columnists something to gossip about.
Whether an index is down 10% or 20% or 9% or 20.5% doesn't matter. It's what the components underneath the surface are doing. We know. We've actually taken the time to look. I would encourage you to do the same.
Also, individual stocks don't go into "Bear Markets". You see, corrections and bear markets are a function of the overall environment. But they don't teach them those sorts of things in gossip column writing school, because, well, why would they?
Let's remember. We're investors. We're traders. They are not. We don't have to make things up. They do (or think they do). We can just focus on the math itself. They have to tell stories for a living.
You see the difference?
So if you're in the business of making money in the market, whether for yourself or for your clients, then you're not going to want to miss what we talked about last night.
This was our very first LIVE Monthly Charts Strategy Session, where we reviewed where we are in the cycle, what some of the potential headwinds could be for this market, and more importantly what the tailwinds could be over the next 2 quarters.
If you want to be more prepared for 2025 and know you have an entire team of professional analysts and traders navigating this market along with you every single day, then Allstarcharts Research is for you.
