Finally, we get some market action that leads to less-than-bullish projections over an intermediate time frame.

First, we’ll start with the hard-to-quantify Honey Hole Setup. See below….

The Honey Hole setup will be familiar to iBC old timers. It is a simple but seldom seen setup, except in bear markets, where it can be almost common. It is formed when price rises from beneath the 50 day moving average and is denied, usually several times, before reversing downward. I think I have tried to quantify its edge in the past, but I do not recall the outcome. For me personally, I automatically take a more cautious approach when i start seeing this setup appear across the major indices.

The quantifiable Bearshitter stuff is this: Today’s close just above the lower Bollinger Band (50,2) has bearish implications over the next 50 days. See results below…

The next 7 days show the propensity for a bounce, but after that, it is downhill. And don’t let this somewhat benign looking chart fool you! It is very difficult to find a quantifiable setup that leads to bearish results for the $SPY looking out over 50 days. Bearish results are uncommon as the markets have had a historical bias to the upside.

The 200 day moving average, the traditional bear market demarcation, sits roughly 1% beneath today’s close. This could get interesting…

Below are some other posts I have written on this or a similar topic:

HAH! Finally A Study Returns Bearish Results

Slicing Through Lower Bollinger Bands: Bounce or Not?

Volume Surge Suggests Bottoming?