Today's update on our monthly Bear Charts can be best summarized with Newton's 3rd Law of Motion: For every action there is an equal and opposite reaction.
The results for the bearish charts are almost a mirror image of the bull charts. In fact, they net out a bit stronger, in my view, with 15 of the 19 coming in with As or Bs, and only 2 failing grades. Taken in combination with the bull charts, I actually see a little more than half the charts with solid performance and 60% with passing grades (C or better). Given the recent volatility, I'd chalk that up as satisfactory.
While some may look at this and say, "technical analysis does not work -- look at the failure rate of the bull charts, or the bear charts only worked because the market fell," I'd say, so what? If you are playing both sides at the same time, isn't that what you would expect?
Furthermore, the bear charts demonstrate how little stress there was in holding those positions for a long way down, while the bull charts saw most of the trades quickly stopped out. While those stops were still losses, they occurred before the worst of the drop for the bulls, while leaving bearish positions open for the best of the drop for the bears. Admittedly, this is in a vacuum without emotion, but that is the purpose of charts and technical analysis. It's just one of the tools a trader can employ, and while I don't believe it is the only tool that should be utilized, I do believe the past month has reinforced that there is value in the concept, even in volatile times, if one can maintain a disciplined approach. And just like the bull charts, the stops and targets along with the market volatility have left any positions associated with these in the past.
Here are the grades for charts 1 to 9 of our 19 Bear Charts.
Chicago Bridge & Iron (CBI)
Walgreens Boots Alliance (WBA)
Marathon Oil (MRO)
Take-Two Interactive Software (TTWO)
Palo Alto Networks (PANW)
Wyndham Worldwide (WYN)