Opinion: The beginning of a bear market is here, says technical analyst Martin Pring

Market Watch:

Technical analyst Martin Pring, president of Pring Research, says the stock market’s recent turbulence is “the beginning of an important bear market.”

Still, he expects a rally over the next few weeks or months before the real carnage begins.

In an interview on “MoneyLife with Chuck Jaffe,” Pring said: “Most of my long-term indicators are now bearish,

[but] the good news is that some of the shorter-term intermediate indicators have reached the kind of levels they got to last August, and that gave us a bounce of some kind, so I am looking for a bounce here that is likely to be followed by new lows later on.”

Pring noted that the typical bear market rally regains between one-third and two-thirds of the previous decline, noting that a recovery of about two-thirds of the market’s January losses would bring the S&P 500’s close to the 2,000 level; he would not expect the market to recoup that point before turning back down.

“The die is pretty well cast,” Pring said. “Virtually every stock market in the world has completed a top. When you get a lot of markets or a lot of sectors doing the same thing — which we call the law of commonality — it’s usually followed by a pretty important move. So if everything is breaking down, that’s not a good sign on a long-term basis.”

Pring suggested that few investors will be nimble enough to play the bear market rally — which he felt could last from six weeks to three months — but said investors should play defense and consider using any rebound to reduce stock exposure. Pring recently suggested that clients keep 20% to 30% of their portfolio in stocks.