The market was going down, down, down and suddenly it has taken off to upside. What happened? Did someone put a leash on the bear or is he just tired and is taking a rest? Maybe the bull has killed him and has taken charge again. I like that last idea. Let’s examine the facts and I don’t mean those told me by those pretty cheerleaders on CNBC-TV. I wonder how many viewers they would lose if they went to old guys who actually knew what they were talking about.

For the recent 6 or 7 weeks the major indexes have relentlessly advanced and the news has been good, good, good. Well, most of it. As a market technician the fact that it has done this on light volume has me worried. Historically volume of trading is the confirming indicator to market direction.

Richard Wyckoff in the 1930s pointed out that it took volume to move the market in any direction. When buyers came out in big numbers and the market went up it was a pretty sure sign it was a bull market. If the volume rose while the market trading volume was falling then the bears were in charge. That is what has been manifesting lately.

Back in the 1920s and ?0s there were no hedge funds or huge professional traders as there are today. In fact, there are more than 8,000 hedge funds. About 70% of current trading volume is being done by the pros. The guy with the best computer program wins. It doesn’t seem to leave the little guy with much of a chance.

Brokers tell him that he is “in for the long haul?and “not to worry about losses? “the market always comes back?and other such nonsense. These geniuses fail to point out that when a stock or mutual fund goes down 50% it must go up 100% to get back to “even? Once any equity has lost that much it could take a lifetime to recover. Do you have that long?

For the past 100 years the cycles have been running about 16 years up and 16 years down. The start of this down pattern was the year 2000. If you don’t believe it run up a chart for the past 6 years and you will see the market has gone nowhere. No, it hasn’t broken badly except for the NASDAQ Index, but the lower tops are an indication that is has much lower to go for the DOW and the S&Pamp;500.

Hopefully I am scaring you. Many technicians will tell you that now is a better time to be in bonds or a money market than own any stock. This bear’s leash is about to break and you don’t want your life savings to be clawed and shredded.

It is better to be out wishing you were in than in wishing you were out.