Ask Colin

Should we keep watching the charts in a bear market?

I think the answer is most definitely, for several reasons:

A bear market is a good time to learn more about stocks and the companies behind them. I also make notations on my charts (F2 key pad in Insight Trader) as I read about companies, so I know what they do and what they plan to do. This sometimes gets left undone when I am busy in a bull market.

During a bear market there is more time to read and do research as well as do all those housekeeping jobs on your data base. Anything you read, or learn at seminars, should be thoroughly tested by checking lots of charts - past and in real time to get a feel for whether the ideas are useful. I do a lot of reading and looking at charts in bear markets.

Whether we are in a bear market or not is primarily determined by Dow Theory phase analysis and technical analysis of the market index. This suggests that in a bear market the chart watching that is required might be quite minimal. However, I think this is a mistake. The whole process is more subtle than that. There are stocks that are rising and falling; likewise sectors. By looking at lots of charts all the time, we should try to develop a