Sunday, December 4, 2016
Joined Nov 11, 2007
1,458 Blog Posts

The Return of the Bearshitter

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?


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  1. drbigboss

    your research is always brilliant. nice work and thanks for posting, one of my favorite ibc bloggers for sure.

  2. Twister

    nice work and yes it’s hard to find something that shows bearish results on an index(or stoks for that matter). I have looked at many setups for hedging but nothing ever worked. Let me know if you know of or find any more.


  3. lowoffer

    well done sir, could I ask what software you’re using to run the backtests?

  4. Keith Shepard

    Love the picture of the bear.

    Gotta bandwagon with the comments above and say nice work as always. Your research is top notch.