Da Bears

Special update... I have had a tendency to focus on bearish events in the markets and on several occasions have called downturns incorrectly.  Being aware of this tendency, I have attempted to find stocks that I believe are moving up, such as YRCW, CGI, OWW, CSCO, and a few others to join in with what has been an incredible bull market since 2009. Several of these have done well and a few such as RIG and CLF not so well.  I mention the above so that you know that I have considered my bias and hope that you do not hear me crying wolf with this update.

The chart below shows the daily Nasdaq 100 ETF (QQQ) with a pattern that suggests and impending downturn.  The degree of the drop is not clearly known at this time as it will depend on price action on weekly and monthly charts as well.  I will be paying close attention to those to look for evidence of a new upturn.

However, a preponderance of evidence is mounting that suggests a significant top has occurred in the markets.  

1. Numerous major stocks have closed gaps that were left in impulse waves with retracement type patterns.  GE  and AT&T are excellent examples.

2. Many major stocks appear to have completed bullish 5 wave impulse patterns. AA, BIDU, NFLX, APC, AET, BA, TIF

3. There are several stocks with weekly bearish candlestick patterns (inverted Hammers and bearish engulfing) 

4. Banking stocks have turned bearish and are often early to move in new trends.

5. A 5 year cycle has hit with the March highs. 

It is certainly true that markets can do anything at anytime and just because there is evidence that many stocks appear to be entering a bear phase, it does not mean that all of them are.  At this time, I think it would be prudent to keep tight stops on positions.

For anyone looking to short, I suggest picking some that already have 50 week moving averages that are flat or have turned down such as ANF, BAC, BBY, C, EWJ, EWZ, FXI, GM, HD, IBM, JCP, JPM, NKE, RIG, SHLD, T.

In regards to recommendations from my last update, BIDU hit the 165 target and FB it 63.5, just shy of my 64-66 target range.  CSCO moved up a bit but did not shoot up in a 3rd wave, so I have sold 2/3 of my position and am maintaining a stop around 20.90 for the rest. 

Trade at your own risk.  I am not a professional.