What a Bear Market Looks Like

• Posted by Greg Harmon
• on December 23rd, 2016

Bear Markets are often categorized as swift moving, with sharp declines and quick but not lasting bounces. This may be the case for some bear markets. But this characterization has come to describe any downward move, even on a small scale. For example, the S&P 500 at the beginning of 2016. That was not a bear market. Not all pullbacks are bear markets. And not all bear markets are fast and sharp.

A good example is Gold. Gold had a tremendous bull market run up until its peak in 2011. Then after a year of consolidation it started lower. And since mid 2012 it has been moving lower. That is 4 and a half years. That is a bear market. Take a look.

The fall began when Gold made a lower high in September 2012 around $1800. From there the signature sharp fast decline took it to about $1200 by June 2013. But it did not stop there. Falling in a channel, it continued lower for 3 years in a slower steady pace down. The start of 2016 had gold bugs excited that the bottom was in, but Gold could not even retrace 1/3 of the move lower in this bounce before turning down again. Now it is close to testing the lows from December 2015.

And the prognosis is not good. I have written previously of the Measured Move giving target lower to about $700. And nothing in the chart argues against that. Momentum continues to favor the bearish side. The RSI is moving lower after turning back prior to reaching the bullish zone. And it has a long way to move to the downside. The MACD is about to cross down, its own sell signal, as it failed at the zero line. The 50 month SMA is moving lower and has crossed down through the 100 month SMA. The 100 month SMA is on the edge of a move lower as well. This is a metal in a bear market with no signs that it is slowing down.

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