Saturday, January 18, 2020

A market crash targets 500 on the S&P

85% off the ~3330 high on the S&P gets us right to the 500 area, finding support from the trendline from the two prior lows in 2002 and 2009.

The beautiful 2008 tape, transposed, gives a good idea of how we might bounce around violently between areas of support and resistance before we finally break down in October and plunge to the 1040 level, eventually bottoming near 500.

The 2008 tape is such a beautiful moment in the markets, it serves as our model.  Again this time, but with more feeling.

SPX daily with 2008 crash tape transposed

Or I guess you could believe that China really is growing at 6%, that they are free to create even more debt, that Boeing won't file for bankruptcy, that US corporate debt is manageable, that real estate prices are reasonable, that the damage from US retail is just a phase shift to online, and the rest.

A crash in October may bring out the best in candidate Trump.  It would be good if he had two more SCOTUS nominations in place before then.


christiangustafson said...

First step is a break in the bearish wedge, with a sharp retrace, into January FOMC. The Fed is here to help, of course.

Randall Beehomes said...

I love it. I could cry

T.Berry said...

as the old saying january goes so goes the year. since 1950 the markets been up for the year 87% of the time it finished up in jan. given the strength of the us economy those odds probably are much higher.

given the above, i believe the s&p will easily finish above 3,600 (easy shot to 4000 in 2021) , dow 32,000 and naz well north of 10,000

and a very big thanks to siri!

hoping we get a 3-5% dip to buy at some point

Randall Beehomes said...

DINGLE berry. You have been missed. Thought the sphyllus had finally done you in. Happy you will be around for Bernie to become President. Buy moar Tesla.

umdengineer said...

Is the corona virus the black swan?

christiangustafson said...

Not yet the Black Swan. I think we're back to waiting patiently for a divergent high, with RSI, breadth, etc sounding the alarm.

Middle of the channel is ~3380 after Feb opex.

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