Bear Market Rally Getting Some Leadership?

Question of the day: Is it really just a bear market rally when we are starting to see so many ETFs moving above their 200-day moving average?

Many analysts consider a stock moving above its 200-DMA to be a buy signal. Furthermore, it is also said that a bull market can be defined as one where major market averages are trending up above their 200-DMA.

Through most of this bear market, we haven't seen many stocks or ETFs anywhere close to their 200-DMA. Now, that seems to be changing.

In my highly unscientific sample, I'm seeing a number of sector ETFs as well as the NASDAQ 100 have moved above their 200-DMA recently. Included among the ETFs I am tracking are the following:

• Technology iShares (IYW)
• Network iShares (IGN)
• Semiconductor iShares (IGW)
• Consumer Discretionary iShares (IYC)

Comparable ETFs from the SPDR family of funds are essentially doing equally well.

In addition, the NASDAQ Composite is a hair away from crossing over its 200-DMA and the Telecom iShares (IYZ), though it didn't quite hold on after crossing above its 200-DMA today, seems ready to make the move soon. Materials (IYM) and Industrials ETFs (IYJ) are also only a few points away their 200-DMA.

Looking farther afield, the iShares FTSE/Xinhua China ETF (FXI) crossed above and now seems to be consolidating at a level above its 200-DMA.

Other major market averages such as the Russell 2000 are only a few points away from their 200-DMA. Will they be rejected or will they power through and confirm something stronger than a bear market rally is underway?

I'm not much at making those kinds of predictions but I am becoming more encouraged with the fact that we now have some leadership that might be able to pull this market upward.

Disclosure: small position in IGN

Comments

[schlumpf:]

the leadership is the FOMC and big banks with tax money.

May 01 02:00 PM

[Abe Mishima:]

If this is a new bull market, let's give credit where credit is due. John Roque was the second to call it. The first was who?

May 01 02:30 PM

[schlumpf:]

Ups Cetin, are you now travel agent?
I thought you are a stock guru.

On May 01 02:19 PM Cetin Hakimoglu wrote:

> if you want to travel to Europe now's the time to do it.

May 01 02:42 PM

[dcb:]

In normal circumstances I would agree, but when it takes 6 weeks to move from as far beow the 50 day moving average as we have come since the great depression to the 200 day moving average something is wrong. Honestly, it should take at least two earnings reports to confirm the the finances of the company are better.

May 02 11:16 AM

[johnthebears:]

Bear Market Rally or a new Bull?

Too soon to say.

Remember that there have always been cheerleaders in the stands making lots of noise to influence the folks, only to see them all sit down with a fumble or two and a few touchdowns for the bears. (this includes presidents, fed and treasury officials etc)

In my opinion, the big question concerning the stress test is will Treasury or OCC win the day regarding transparency? It was the Comptroller of the Currency folks that prevented state governments from going after predatory lending... saying that was the job of the Washington! It appears that Treasury may have the final say this time, but OCC is putting up a fight.

Some mention has been made in the press of "OFF BALANCE SHEET ITEMS" but the subject is immediately dropped with no explaination of what they are or effect those items might have.

When life insurance and other kinds of companies are included with banks supported by TARP, you have to wonder what is next to hit the fan.

Remember ENRON, largest bankruptcy ever? That was due to "OFF BALANCE SHEET ITEMS" that investors and regulators did not know about. (they have now closed 32 banks this year)

I think the delay in releasing the stress test is due to concern about what "off balance sheet items" need to be revealed to the public.

I would appreciate hearing comments by others that can calm my fears. For now, I think that the other shoe is about to drop for the banks.... then more collapse of commercial real estate and REIT's with falling occupancy, rents and income, leading to major commercial foreclosures and bank failures, comparable to the housing foreclosures we have heard so much about.

If I am right about this, look for a Dow of 4000 before the end of 2009! Pray that I am wrong, but what if I am not?

May 02 01:07 PM

[Econ 101:]

How about a GS manipulation of the market fueled by our tax dollars from the Fed and the Treasury?

seekingalpha.com/artic...

Jionthebears- I hope you are wrong but doubt it. I think BHO has an agenda to destroy the banks by extending credit until they OD. The SDS Weathermen he has as advisors have been thinking about this for 30 years. They are simply applying Ronald Reagans policy towards the USSR to the banks.

Support HR 1207!

May 02 02:39 PM

[Old Trader:]

This article seems to lend credence to the notion that at market turns, the leadership baton changes hands. During the last bull, it was financials that led the charge....THAT'S not gonna happen this time around, methinks. I'll grant that the balance sheets of many, if not most of the tech stocks are robust, chock full of cash, and little to no debt, which is a great place to be at this point in time.

Having said that, I'd feel a bit better about stampeding the bulls if there was a bit more confirmation on the technical side ('cause the fundie side's not looking so hot, at the moment).

May 02 06:50 PM

[Subhankar:]

Moving above the 200 day Moving Average (MA) is necessary but not sufficient. The 20 day and 50 day MAs also need to cross above the 200 day MA to call a new bull market.

May 03 02:20 AM