Where the market is heading in longer term?

S&P 500 today up 27 points, the next resistance will be the 200 days moving average which is 1105.62, after that we have a gap to fill at 1115-1120. Be very careful and alert to watch the market at this point, see if it wants to rise or sink.

Today I am going to talk about the bull and bear situation because I think many people are confused at this time with the direction of the market.

Based on the longer-term phasing and valuation aspects, I belief that the advance out of the March 2009 low has been a bear market rally. Based on my analysis and the data at hand today, I believe that this rally will ultimately prove to be a much longer-term bear market. Historically, Phase II declines are the most devastating and it is my belief that once this bear market rally has run its course, the Phase II decline will be far worse than what was seen between October 2007 and March 2009.

The market  also start a traditional bullish primary trend change with the advance up out of the 2009 Phase I low, and I believe that bullish primary trend change is currently still intact. However, I think that the advance out of the March 2009 low has been crippled and obviously the events seen in May were not good.

The last three rally we have seen in  May, 21, 25, 27 and yesterday are below average volume, we have to be more cautious when we want to get back to this current market. Yes, the market is oversold right now, but if the confidence of the market is down and lack of buying, it will stay at oversold area for a long period of time. And I deeply believe that the second wave of banking trouble is going to start. At that time, the phase II down leg will be in full force. I will suggest you to lighten your portfolio in each market rally from now on so as to avoid to be the next bear market victim.

In seasonal point of view, you may not want to put a heavy weight on bear at this time because June and July are not the worse months, you may want to wait for August through October. Therefore, if the market sell off to the support I mention yesterday which is the 80 weeks moving average S&P 990 with extreme fear and capitulation mode, you may want to add up your portfolio.