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Bear Market Bottoms Examined for SP:SPX by Vixtine

So many bulls and bears are stating their cases on social media as to whether or not a bottom is in so I thought I’d take some time today to examine what a daily bottoming process looks like using SPX .

Standard & Poor’s 500 was created in 1957 and since then it has gone through 9 bear markets (Defined as a GREATER THAN 20% decline on a CLOSING basis). 2022 will make 10 but at this point we do not know whether or not we have a bottom in place until we can break above the all time high of 4818.62

As you can see from the below charts, with the exception of Oct 1987; all the bottoms have large & steady “thrusts” IMMEDIATELY after the lows were made that held the following re-tracements IMMEDIATELY:

.382 – 67% (6 out 9 bottoms- 2009, 2002, 1982, 1974,1966, 1962)

.50 – 11% (1 out 9 bottoms-2020)

.618 – 11% (1 out 9 bottoms- 1970)

< .618 – 11% (1 out 9 bottoms-1987)

Our current bottom could NOT hold the .618 immediately after the low was made therefore it falls into the category of the 1987 exception/rare case. The strongest cases show a thrust and then hold of a .382 re-tracement.

I’m using a very basic bar chart with black bars to cut down the noise of everything, inserting a Fib Re-tracement, drawing the immediate thrust and adding the number of trading days it took to get above the last lower high.

June 1962 (Approx decline: 27%)

Oct 1966 (Approx decline: 22%)

May 1970 (Approx decline: 33%)

Oct 1974 (Approx decline: 48%)

Aug 1982 (Approx decline: 27%)

Oct 1987 (Approx decline: 33%)

Oct 2002 (Approx decline: 47%)

March 2009 (Approx decline: 56%)

March 2020 (Approx decline: 32%)

I hope you enjoyed this post…at a minimum it gives me one post that goes back in time to look at the daily charts of all 9 SPX bear market bottoms to analyze the look and feel of a bear market bottom since they happen so infrequently!

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