Last week, I mentioned that I was almost bearish. That’s over. This week’s stock signals include 211 new DOWN signals vs. only 21 new UPs. Additionally, I gave 46 new DOWN signals on the ETFs. The 10:1 ratio of DOWNs to UPs put the HEDGEfolios Timing Indicator into Bearish territory and this was confirmed by having more than 50% of the stocks I cover showing DOWN signals.

As I wrote on Sunday, last week’s declines were brutal to the technical underpinnings of this market. The market forces I follow had all turned negative in terms of their pressure on equities. Fundamentally, earnings season has not been supportive of higher prices. Monday and Tuesday may have benefited from AAPL and AXP, but Wednesday is being hammered by MER. This is exactly why I encourage everyone to let each company’s quarterly report speak for itself and avoid the media-induced temptation to believe they are proxies for the entire market. Having the indices up on AAPL earnings and down on MER earnings losses is providing a lot of excitement for the purveyors of financial entertainment and lots of trading commissions for brokers and intermediaries. However, they are not adding much to intermediate or long term profits for investors which is all I focus on.

My biggest challenge last week was not overdoing the signal changes. The slope of Friday’s decline was not sustainable and too many stocks moved too far in my opinion, so I tried to avoid overreacting. In these cases, I don’t spend much time looking for new buying opportunities, I just try to figure out what stocks not to sell. Yesterday, that decision seemed smart given the rally but today, it doesn’t look so hot. The market is much too volatile for me and does not fit with my trading style which is based on weekly technical indicators and longer term macro factors. One or two days of moves are interesting but over time, they smooth out and revert to the general direction of longer term trends. Right now, I believe that trend is bearish.