Growl. Macau stocks are officially in a bear market, defined as a 20% decline from highs, just in time for Typhoon Mangkhut. What happens from here over the next six weeks into earnings will be telling for Macau shares longer term. Turning points only become obvious in retrospect and we could have been at one back in May when the Market Vectors Gaming ETF (BJK) topped out. If Macau doesn’t reverse quickly from here, we could continue deeper into bear territory for a year or more.

The magic bear number 20% has no particular significance other than the bear nomenclature itself, which has the effect of pulling people out of their preconceptions about market trends. Since 2008, Macau has only experienced one 20% fall that didn’t result in a long term downtrend, and that was August to October 2011. Macau shares fell 31% over two months but then quickly reversed, ultimately continuing an uptrend that ended only in March 2014, 51% higher than the August 2011 top. So it is possible to reverse a 20% bear market, but it must be done quickly with a sharp reversal. October 2011 saw that, and Macau continued a pattern of higher lows and higher highs.

2011 didn’t have the liquidity panic nor the speculative bubble that needed to correct in 2008, and it didn’t have the fundamental aspect of the VIP crackdown of 2014 that took gross gaming revenue to the woodshed. There was a brief panic in equities globally in the summer of 2011 that quickly reversed itself. Will 2018 be the same? A quick bear flash that ended up being only a blip on a long term chart?

Probably not.