Stocks fizzled Wednesday, ending in bear-market territory for the first time in more than 5-1/2 years as oil jumped and fears about the financial health of General Motors mounted.
The Dow Jones Industrial Average enjoyed brief rallies in morning trading but ended down by 166.75 points at 11215.51, down 20.8% from its record close in October. Traditionally, a fall of 20% from a high is considered the definition of a bear market.
The technology-focused Nasdaq Composite Index skidded 2.3% to end at 2251.46, also tumbling into bear terrain. It has now tumbled by 21.3% from its multi-year peak in October and is down 15.1% for the year to date.
Major stock indexes last suffered a bear market in the wake of the dotcom meltdown, with the Dow returning to a bull market in October 2002.
The blue-chip average had flirted with bear territory during each of the last three trading sessions, but in each instance attracted enough buyers by day's end to miss the mark by a few tenths of a percentage point.
Let's take a look at the ETFs.
Eyeballing the round numbers on the SPYs, it looks like a 19.23% decline (156 to 126.08). In addition, notice the clear down up down pattern emerging. The first downward move is from the end of October to the beginning of March, the first upward move is from mid-March to the beginning of May with the second downward move starting at the beginning of May. Also note prices are below the 200 day SMA as well as all the SMAs. Finally, all the SMAs are moving lower.
With the QQQQs, notice the following:
-- Prices are below the 200 day SMA
-- Prices are below all the SMAs
-- The 10 and 20 day SMA have moved through the 200 and 50 day SMA
-- The 10 and 20 day SMA are moving lower
-- The 50 day SMA is moving higher
-- the 200 day SMA is neutral
With prices moving lower and the shorter SMAs moving lower there will be downward pressure on the 50 day SMA to move lower as well.
On the IWMs, notice the following:
-- Prices are down about 21.27% from their high in late October
-- Prices are below the 200 day SMA
-- Prices are below all the SMAs
-- All the SMAs are moving lower
-- The 10 and 20 day SMA have just moved through the 50 day SMA
