Stocks ended the day down 1.18%, as measured by the world stock fund VT in terms of US dollars. In terms of gold, the damage was somewhat less at -0.88%. As we have been discussing, bearish factors have been accumulating. Does the technical picture support the notion that after a nine month hiatus, the bear is back?
A reasonable test is whether the trend line connecting the lows of last October and of this March has been breached. The answer … unambiguously ambiguous. In fact the market closed today visually spot on the line. So the title of this post is premature.
Then why propose it now? Because tomorrow’s close will provide the answer. If it’s lower, the supporting trend line will have been broken and the technical burden of proof will then fall to the bulls. If it closes higher, the rising trend support holds and the bounce would signal a reprieve.
For now. Regardless the case for conservatism is there. A palpable change in the market camber occurred as July gave way to August. We commented on the seasonal setup in When Will Wile E Coyote Look Down?. We will have our answer in under 24 hours.