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Out with the Bull, In with the Bear

954 days. That's how long this bull market has been rising, since the 1,810 low on February 11, 2016. Two years and seven months is quite a bull market, and the annual return of 25% if you were lucky enough to get in at the low, and get out a few weeks ago. There have been a few 5% pullbacks along the way, and then the quick 12% drop at the beginning of this year, but for the most part it's been a strong and steady climb.

It's interesting how few times the S&P 500 has closed below its 40-week moving average, during this bull run. It's certainly traded below it a number of times, but on closing basis, only two times in two years and seven months - November 4, 2016 and March 23, 2018. This past week, though, was its second consecutive weekly close below its moving average. On the plus-side, we have yet to see the 10-week moving average cross below the 40-week. It seems inevitable, though.

How low will this selloff go? Of course nobody knows, but the market does seem to alternate between mild-and-long, and extreme-and-short. The 2015 - 2016 bear market was almost nine months long, but very mild at a 15% pullback. So mild in fact, that half of the experts out there don't even consider it a bear market. But since this non-expert does, it leads me to expect this bear market to be much shorter in duration - perhaps just thirty days? I don't know, but election day is two weeks away. But the flip-side of short is extreme and this could be one for the record books. Or not. But I think it will be.

Shorter term, I will be watching the 2,767 level tomorrow morning - the market spent much of Thursday and Friday trading around this level. There is a lot of resistance at 2,783 - 2,785. Near term support levels are 2,752, 2,742, and 2,734. Earnings are likely to continue dominating the news, again this week - primarily on Tuesday, Wednesday and Thursday. Should the Saudi assassination fiasco blow-up into U.S. sanctions (or appear like it might), the major defense companies are sure to be impacted, and will have to answer those questions on their investor calls this week.

-- Scrib