Another Sign of a Bear

The long-term stochastic indicator stays elevated throughout bull markets going back to the mid-1990s, when the Federal Reserve began intervening heavily in the stock market. Prior to that, there were trips to "oversold" levels every few years, the last sub-50 non-bear reading was in 1994. Since then, the indicator has only gone below 50 in full blown bear markets. The 200-day moving average did hold in those bull market drops in stochastics. Since the start of the bull market in 1982, the only sustained breaks of the 200-day occured during the 2000 and 2008 bear markets.