Saturday, May 28, 2016

Interesting CY2001 Analogy

Take a look at Dow CY2000-2001 and SPX CY2015-2016. They have a lot of similarities. I mentioned a couple months ago that perhaps the parabola was alternating bear markets rather than growing exponential, but the peaks and valleys have now followed a similar pattern with CY2000-2002. If the pattern analogy is bad, SPX will rally above 2111/2135. If the pattern analogy is good, SPX will drop down to the 2000-2010 area near its 200SMA over the next couple weeks, pause a couple weeks, then drop to 1900-1950 into late June followed by summer consolidation and a fall 20%+ collapse probably fitting the measured move 2100-->1800-->1500-ish. Having said all that, sentiment is actually very neutral rather than extremely bullish, so bears will likely need to see sentiment improve after some consolidation around the 200SMA under this analogy...and a large W or cup-and-handle breakout to the upside cannot be ruled out. No promises on further summer posting but I guess I have to wean myself off. I do have open trades, so I'm still looking at charts. And McLellan, some cycle work and other factors including the election point to Oct/Nov (and possibly again in Q1) being a potential significant low. Good fortune.

1 comment:

  1. great info S2. keep'em coming. I believe this is a great risk/reward shorting opportunity because the stop level is already pretty close by. Thanks for posting again S2.

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