It’s been a crazy ride for stocks over the last month and half. With increased volatility we are experiencing something we haven’t seen since 2009; -10% YTD returns on the major indexes. It’s been 6 years since the last bear market so are we headed for the next bear market or are we close to a bottom?
Carter Worth has made a name for himself by calling the top in stocks in 2007 and the top in gold in 2011. He’s a regular on CNBC where he shares his market insights. Worth argues that the uptrend of the last few years has been broken, with almost no sectors in an uptrend, and that we are in a bear market. Certainly recent market action backs him up, with sharp declines and big bounces being seen over the last 6 weeks. Classic bear market action. You can read his full analysis here and also check out some great charts.
Jim Cramer disagrees with Worth and thinks a bottom is close. According to Cramer: “I don’t hear much bullish commentary anymore from anyone. I feel most commentators have joined me in the bearish camp, and that’s worrisome. The consensus is rarely right when people are all in, no matter what the direction.”
My friend the Lazy Trader agree with Cramer and thinks this move lower has been overdone and has reached a “short-term pessimistic extreme“. He’s taking advantage of the increased volatility by selling October 980-970 Put Credit Spreads for $0.60.
What do you think? Are we entering a bear market with more pain ahead, or are we due for a bounce?
