Technical Trader: 'This Bear Market Is Just Getting Started'

Editor's note: Today and tomorrow in Empire Financial Daily, we're turning things over to our friend and colleague Greg Diamond at our corporate affiliate Stansberry Research... Greg's 16 years of trading and portfolio management experience covers every asset class. He has traded for a $3 billion hedge fund and a $35 billion pension fund... he […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Editor's note: Today and tomorrow in Empire Financial Daily, we're turning things over to our friend and colleague Greg Diamond at our corporate affiliate Stansberry Research... Greg's 16 years of trading and portfolio management experience covers every asset class. He has traded for a $3 billion hedge fund and a $35 billion pension fund... he has spoken at business schools on trading and technical analysis... he's a member of the Market Technicians Association... and he holds the prestigious Chartered Market Technician ("CMT") designation. In his Ten Stock Trader service at Stansberry, Greg utilizes "technical analysis" – studying past trends and human behavior to determine the next moves in individual stocks and the broad market. And right now – as he explains in an essay originally shared with his Ten Stock Trader subscribers – Greg is seeing some big warning signs... 'This Bear Market Is Just Getting Started' By Greg Diamond --------------------------------------------------------------- [Wall Street legend calls this stock a 'Perfect 10']( While Big Tech is crashing fast, one legend says this $4 stock is a " [Perfect 10]( --------------------------------------------------------------- But if that happens because I'm honest about what's happening in the market, then so be it. As I often tell my Ten Stock Trader subscribers, I have no bias. I call it like I see it. Technical analysis allows you to do this... It keeps you honest about what's happening and not what you want to happen. It's why I believe everyone, no matter your level of investing expertise or strategy, should understand at least some aspects of technical analysis. As I'll detail today, the price action right now is very bearish. Price action guides us all, whether you want to be honest about it or not. The market doesn't care about what any of us think or want. It's going to do what it's going to do – all you can do is react. Quite frankly, this bearish outlook is no surprise. I've been warning my subscribers since last fall that 2022 is the year the stock market will likely top out. So whether you like me or not... and whether you agree with me or not... I'm going to outline several things that tell me the bear market in stocks is set to take a giant tumble. Let me explain... I'm not going to start with a stock or an index. Nope, I'm starting with bitcoin. Yes, bitcoin is in a bear market. I know, here comes the vitriol. But again, I call it like I see it... Bitcoin made its high in November 2021. Since then, as I noted on the chart, it's down roughly 60%. Now, bitcoin is volatile... and we can expect these types of moves. While that's true, look at what else this price action lines up with. Here's Nvidia (NVDA), a semiconductor stock... Here's Advanced Micro Devices (AMD), another semiconductor stock... Both Nvidia and Advanced Micro Devices hit their highs in November 2021. And both dropped more than 40% from that high. --------------------------------------------------------------- Recommended Link: [WHITNEY TILSON: 'DID YOU MISS MY LATEST PREDICTION?']( He called the dot-com crash in 2000... the housing crisis in 2008... and even the bottom of the stock market after the COVID crash in 2020. At the time, these calls were all considered controversial. But the day they all actually happened, they became reality. And now, his next controversial call is in. In short, Whitney says an inflation shock that will catch most Americans by complete surprise could strike as soon as June 10th. So DO NOT wait to act... Once this shock becomes a reality, it will be too late. [Click here for the full details](. --------------------------------------------------------------- So here's my point... Bitcoin is incredibly correlated to technology stocks. And these stocks are in a bear market right now. Unless that correlation breaks, bitcoin isn't an inflation hedge... and it's not a hedge against bear markets in stocks, either. It's a sign, at least in my opinion, that capital is fleeing to safety. Stocks and bitcoin are in "risk off" mode. Now, maybe this correlation will break down in the months or decades ahead if there's a new monetary reset... Or maybe we'll see some breakdown of the current system, where bitcoin becomes the new U.S. dollar or some version of that. And if that happens, stocks and bitcoin will diverge from each other. Fantastic. I'm no fan of powerful central banks and the unelected bureaucrats who run them. I'd welcome what bitcoin has to offer in terms of decentralized money. But that wish list aside, right now – if we're just focusing on what's happening and not what we may want to happen – the price action is highly correlated with stocks. And that's all it is right now. So this correlation adds to my conviction that stocks will continue to decline. Certain stocks have held up quite well this year, despite the volatility... Two stocks I'm watching specifically are construction giant Caterpillar (CAT) and agricultural-equipment manufacturer Deere (DE). Both rallied back to or near new highs over the past few weeks. This may be coming to an end... Take a look at the following chart. You can see that Caterpillar had a big price gap down last month... A price gap refers to a gap between one day, week, or month on a chart. These gaps can accelerate moves in stocks. The start of the downtrend can really get going with such a big move down. And there's a similar setup in Deere... Not only was there a big gap down in Deere, but this was coming off a "fifth-wave top" recently. That's referring to Elliott Wave Theory – the idea that stock prices move in a series of five "waves" (more on this tomorrow). In Elliott Wave terms, five waves mark the end of a move (up or down). And in this case, the rally was completed, and the sharp sell-off confirms that the high is in place. Let's zoom out and look at a long-term chart of Deere... As I noted with the black dashed lines, Deere traded in a nearly yearlong consolidation – or range – before making its final high into late last month. Note the negative divergence on the relative strength index ("RSI") at the bottom. As Deere made a new price high (the red line on price), the RSI did not. That set up negative divergence and was a warning that the rally wouldn't hold. So we're likely seeing that some stocks that held in (where some bulls could hide) are now catching up to stocks that have been in bear markets since last fall... like Nvidia, Advanced Micro Devices, and many other technology stocks. That means stocks like Caterpillar and Deere are just starting their bear-market moves. And that spells trouble for the rest of the market. This bear market is going to accelerate in the weeks and months ahead. Regards, Greg Diamond May 23, 2022 Editor's note: Amid the chaos in the market, Greg just issued an urgent warning for investors... In short, he predicts that the market will see a massive turning point on May 25 – one that could cost you all of your gains over the past two years. However, he says that if you take one step today, you could double your money 10 different times... without touching a single stock. You have to act quickly – [get the details right here](. 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