Bear-Market Rally History Repeats!
The current “rising wedge” pattern on the S&P 500 chart is paralleling the one from seven years ago very closely. Take a look at how that pattern from the last bear market collapsed:
The big down day came on February 2, 2001 when the S&P dropped 24 points. Yesterday, the S&P dropped 25 points.
On February 3, 2001 the S&P bounced back 5 points. Today, the S&P bounced back 5 points.
What comes next if we continue to parallel this classic bearish reversal pattern? Another 100 points down over the next three weeks.
Will that happen? During the last bear market, we were unwinding a much larger bubble, so maybe not. But this time, we have a genuine financial-crisis/real-estate-disaster which could turn out to be just as bad, so maybe history will repeat.
In any case, this is a very, very scary place to be long. And as you might have guessed, I am way short this thing.
May 9th, 2008 at 10:33 am
Great site Matt, keep it up. Together with charts on long-term trends in money supply (M1) (USA and my home country) this is my investor guidance now.
May 9th, 2008 at 10:55 am
Hi Larry,
Thanks for the kind words.
Matt
May 27th, 2008 at 4:16 pm
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