Bull or Bear

Chris Puplava at Seeking Alpha has written an outstanding article on how to tell if the recent large stock market sell-off is the beginning of a bear market or if the bull market will resume.  The most important indicator that he discussed was the NYSE 200 day average line for NYSE stocks.  Whenever this chart reaches the 30% region or lower, the market could be in extreme danger.  If stocks bounce off the bottom of a major sell-off back above 50% on this indicator, then the market is still bullish.  If stocks cannot get back above the 50% level, then we are going into a bear market. 

Another index that Chris discussed was the Nasdaq summation index, $NASI.  If this indicator falls below -500 and stays there, this is a second reliable indicator that we are going into a bear market.  If this indicator gets back above +500, that is a bullish sign.  November and December are the best two months of the year for stocks also.  One reason for this is that companies like to repurchase shares during these two months, and big institutions can easily move the market higher.  We definitely need to be cautious in the market, and the strongest stocks like Facebook are the safest.  After December though, I may sell FB because I believe 2015 will be even more turbulent than 2014.