I use monthly chart of S&P 500 index with 13-month exponential moving average (EMA) and slow stochastics (STO[15,1]) to spot multi-year market trend. Looking at the 10 year chart below, the index fell below its EMA in October, 2000 signaling the long term bear market. The signal was confirmed by the STO which dipped below 50 in November the same year. The bear market lasted for 2 years and 6 months before the index turned bullish and climbed above the EMA in April, 2003. The bullish sign was confirmed by STO climbing above 50 in July, 2003. The bull market then ran for 4 years and 8 months. The multi-year bull market came to an end when the index fell below its EMA in December, 2007 and confirmed by STO in January, 2008. You all know what happened in the next 10 months. Right now, we are still in the bear territory. From past experience, trading funds in the bear market and expect profit is like swimming against the tide: a lot of hard work with little gain or even big loss. For ordinary investors like you and me, it is better to stay on the sideline and preserve the capital.
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