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Bear Market Roadmap Update


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#1 kssmibotm

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Posted 06 February 2016 - 02:04 PM

I updated the bear market roadmap to show the latest 2016 performance (green) and the 2008 analog in blue.  For your viewing pleasure, I also zoomed in to show just the first 6 months.  The striking similarities between '08 and '16 continued with this week's selloff in the SPX.  In terms of timing, the low on Friday corresponds exactly with the low set in 2008.  Of course, analogs are not exact, and it would not be unusual to see a 1-2 day deviation which would extend the low to Mon or Tues.
 
Nevertheless, once the low is set, we should see a choppy rally into late Feb, if we continue to track the '08 analog.  Such a rally should be long enough and strong enough to dissipate the extreme bearishness we are seeing now.  A late Feb top would set the stage for the next leg down, and if '08 is any indication, the decline will be sharp and swift, much like the meltdown we saw at the beginning of this year.  I'm not a big fan of short term OTM puts, but they might be a good play in late Feb if the market continues to follow the '08 script.
 
I am sure most of you are aware that analogs are a tricky beast.  They work great until they don't.  As always, corroborate this analysis with your own.
 
Good trading,
KMB
 
SPX%20Double%20Digit%20Decline%20Average


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#2 pdx5

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Posted 06 February 2016 - 04:34 PM

WOW! I should have been sitting on the commode while reading that chart! cry2.gif


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#3 kssmibotm

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Posted 06 February 2016 - 05:28 PM

WOW! I should have been sitting on the commode while reading that chart! cry2.gif

 

Well, I hope it elicited the desired response. swoon.gif



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#4 pdx5

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Posted 06 February 2016 - 07:23 PM

One of the best analog charts I have seen on this site. Great job!


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#5 Charvo

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Posted 06 February 2016 - 08:38 PM

Since KMB has started a topic on 2008 and 2016 comparisons, here's a chart of the S&P 500 equal weighted index.  The chart pattern in 2008 looks strikingly similar to what is happening right now, but the 2015 top seems broader which would bode for more declines off the top.

 



#6 Ticker

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Posted 06 February 2016 - 11:05 PM

On the surface the charts look similar.   However after reviewing the charts carefully I think there are important differences.  In 2008 were were in a defined downtrend from Oct to January before the market tanked in January.  This year the top was much more broad and we were in more of a trading range until January.  In 2008 we had a double top off of the lows before resting the lows.  This year so far we only have one peak.  If we go back and retest the recent highs this year from this point I will temper my bearish outlook.  If we go straight down from here to test the lows I think we go much lower from here and quickly.  Next week will be crucial in how this plays out.  My impression is that crude is on its next leg down and will break the recent lows.  If that happens there is no way we retest the recent highs.  This is my WAG.  Let's see how it all plays out.



#7 K Wave

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Posted 07 February 2016 - 11:21 AM

Since KMB has started a topic on 2008 and 2016 comparisons, here's a chart of the S&P 500 equal weighted index.  The chart pattern in 2008 looks strikingly similar to what is happening right now, but the 2015 top seems broader which would bode for more declines off the top.

 

What that chart clearly shows is a breach of major support and a then back test of the floor that failed to punch back through. Another term I have for this is the Hangin' Turd formation. When that formation gets pinched off (which is not 100% of the time), some fast deep declines can occur.  A classic example of this formation can be seen on the hourly Naz Comp chart on Jan 4-5 of this year. That aftermath was brutal...and that was on a shorter term time frame, so adjust accordingly if this one lets go.

 

I'll say it again...another hourly close on SPX below 1867 opens the door to a rout that almost nobody is even contemplating here...

 

Bulls need a big stick save and they need it real soon....and it is possible they could get it, as the SPX and SPXEW bounced right on the 900 day MAs on the Jan 20 low, and as of yet, have not taken it out.

But if we bust that low, nuthin' but air below........MSS has already pointed out just how wild things could get to the downside should bears win this very important pivot battle.

 

My 5, 15, 60 min SPX charts went back on sell at 1900 on Friday, and until that level is reclaimed by the bulls, they are in potentially grave danger here....

 

Couple that with USDJPY being parked at the cliff edge on Friday, after an extremely ugly reversal last week, and I just don't think it is the time to be unequivocally bullish here, until we see a bit more action....

 

Should the bulls manage to reclaim SPX 1900, would be first sign to me that IT low is possibly in....


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