This Trend Is Not Your Friend
Was last week's rally just a momentary respite from the bear's roar? Find out what the charts suggest!
Andrew Burkly, Brown Brothers Harriman technical strategist joins the panel for this conversation. Following is a summary of his main points.
Chart: S&P 500, 1-year daily with 50-day moving average.
Analysis: We're in a bear market rally within an ongoing downtrend. It could take us 8 –10 weeks to retest the lows.
Chart: Current Bear Market Vs. 1990 Bear Market.
Analysis: Current bear market resembles the 1990 bear market in that both are consumer-led recessions.
Chart: CBOE Volatility Index, 1-year daily with 50-day moving average.
Analysis: The VIX should give an early indication of when the worst of the bear market is over. The VIX has been steadily trending higher and appears to be accelerating on the upside - a bearish sign.
Chart: Amex Broker-Dealer Index, 1-year daily with 50-day moving average.
Analysis: Bearish. Overall weak trend; appears to be a good short candidate.
Chart: Energy Select Sector SPDR (XLE), 1-year daily with 50-day moving average.
Analysis: Bullish. Strong reversal off prior low; looking for new highs.
Chart: S&P 500 Energy Sector Seasonal Pattern.
Analysis: The energy sector is now in its strongest seasonal pattern of the year. It typically outperforms the market about 75% of the time between now and April.
For an in-depth look at the charts used in Burkly's analysis please watch the video.
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Trader disclosure: On Feb.19, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (YHOO), (INTC); Finerman Owns (GS); Finerman's Firm And Finerman Own (CROX), (KALU); Finerman's Firm Owns (MSFT), (TSO), (VLO), (WMT), (YHOO), (AAPL); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM),(COF); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Seymour Owns (INTC), (MER),(MSFT), (BLK), (GOOG), (AAPL); Seygem Asset Management Owns (CCJ), (TIE), (TSO), (EEM), (GFI) (HMY), (FMX), (FMCN); Seygem Assset Management Owns Shares Of Uranium One