The team at All Star Charts lately has been talking about how a lot of stocks are displaying declining moving averages and share prices continue to trade below these downward-sloping moving averages. There is nothing bullish about that.
What it means is there is likely an avalanche of overhead supply in most areas of the stock market right now and therefore many rallies will be met with more and more people trying to unload their positions. This is a tough environment to be a bull in.
There is always money to be made in bear markets, but it requires a different skillset, steel nerves, and quick decisions. And whereas in bull markets, we love to put on bullish positions that have 6-9 months to play out so that we can let the underlying trends grind their way higher, in bear markets we like to take more shorter-termed positions because we need to take profits quicker. Bear market rallies are notorious for stopping out even the best of short positions.
With all this in mind, today’s trade is in one of those names that have been in a persistent downtrend, and is trading below significant moving averages. [Read more…]