Jim, thanks for spending some time with us. That's the traditional threshold for labeling a bear market. When it comes to lofty expectations, valuations, technical divergences, and economic imbalances, we certainly have the prerequisites for a bear market. Watch this graph for a break under recent lows. In short - breadth, leadership and monetary policy.
Bear markets have common characteristics.
Among these are diverging breadth, poor leadership and an unfavorable monetary climate. One measure of the breadth or support behind market moves is the NYSE Advance-Decline Line. This is the biggest divergence in history without seeing a bear market in blue chip indexes. The fact that this divergence is continuing only heightens the risk going forward. Among the technical models we follow in The InvesTech Market Analyst, our Negative Leadership Composite is the best tool for monitoring market leadership.