Stock Market Looking Bearish Into End of Year

BestOnlineTrades is issuing a BOT Short signal at 1214 in the sp500 as we move into the end of the year.

The sp500 is looking very bearish into the end of year 2011 and early 2012.  The tape has been struggling to get a sustained rally going.

The monthly price candlestick chart of the sp500 is showing a double inside month currently which likely means that January 2012 will be a highly volatile month.

The market still has longer term sell signals in place.  It has been a wild volatile ride since August 2011 and the market has managed to chop chop sideways for an extended period of time.

It is possible that the market is about to enter the more bearish phase of decline and that the entire structure since July 2011 has been an initial corrective structure that was to prepare the market for a more serious beating in 2012.

There is still some wiggle room for the market to trend higher out of the current double inside month candlestick pattern, but we would need to see the tape start to firm up dramatically between now and end of year 2011.

The arguments against a more pronounced bearish trend is the current light trading volumes on downward price action.  This may be a temporary development given the holiday seasonality.  Perhaps the true conviction of the market will have to wait until January 2012.

The market right now is not in a mode of serious conviction to the upside or downside.  We are not seeing consistent higher highs or consistent lower lows.  This speaks to a market that is undecided and trying to determine a true direction.

All that may change as we transition into January 2012.

The 200 day moving average still has a clear downward slope while the 50 day moving average is still rising.  If when we see the 50 day moving average start to curl down again, we could see a new phase of downward sustained momentum.

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