From November 2, 2009 to January 19, 2010, the S&P rose from 1030 to 1150 (9.2%) without making any significant corrections over that span of 52 trading days. For example, the S&P never once retreated to its 50 day moving average, but stayed comfortably above it.
After a 13 trading day "break" (correction), the next bull run started on February 5, 2010 and lasted until April 26, 2010. The S&P rose from 1045 to 1220 (16.7%) over those 54 trading days without any significant corrections.
As we all know, the S&P promptly gave back all of its gains from these two bull runs and then some over the next two months, bottoming at 1011.
Starting August 31, the S&P embarked on a 47 day bull run with no significant corrections, rising from 1041 to 1227 (17.9%).
After taking a 16 day break/correction, the current bull run began on November 30 at 1174.
If this pattern is to repeat, then we can expect a ~50 day bull run into ~February 9, 2011 without much in the way of corrections. However, when the S&P finally tops out in February, we would then expect a correction similar in scope to what we saw in May-June of 2010.
After a 13 trading day "break" (correction), the next bull run started on February 5, 2010 and lasted until April 26, 2010. The S&P rose from 1045 to 1220 (16.7%) over those 54 trading days without any significant corrections.
As we all know, the S&P promptly gave back all of its gains from these two bull runs and then some over the next two months, bottoming at 1011.
Starting August 31, the S&P embarked on a 47 day bull run with no significant corrections, rising from 1041 to 1227 (17.9%).
After taking a 16 day break/correction, the current bull run began on November 30 at 1174.
If this pattern is to repeat, then we can expect a ~50 day bull run into ~February 9, 2011 without much in the way of corrections. However, when the S&P finally tops out in February, we would then expect a correction similar in scope to what we saw in May-June of 2010.
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Sentiment says that won't happen -- too extreme here. Must be reset to go all the way to Feb 9.
ReplyDeleteBuy the dip...
ReplyDeletehttp://www.youtube.com/watch?v=jllJ-HeErjU
POST-MASSIVE BEAR MARKET RALLIES
ReplyDeletea ‘massive’ bear market is defined as a decline of greater than 50%. Since the Dow’s inception in 1896, there have been only three bear markets whereby the Dow declined more than 50% (early 1930s, late 1930s until early 1940s, and during the very recent financial crisis).
The current Dow rally has followed a path that is fairly similar to that of post-massive bear market rallies. The initial surge of the current rally lasted nearly 300 trading days and has been trading flat/choppy ever since. It is worth noting that the current rally just made new rally highs. However, both the 1932 Dow rally and the 2002 Nasdaq rally briefly made new highs during their flat/choppy phases. If the current rally were to continue to follow the post-massive bear market rally pattern, the current choppy phase would continue for another 150+ trading days (i.e. 7+ months).
See Chart at: http://pragcap.com/post-massive-bear-market-rallies
Marshall,
ReplyDeleteI would add the 1973-74 bear market which fell more than 50% in real inflation-adjusted terms.
Don't forget to buy the dips...
http://www.youtube.com/watch?v=jllJ-HeErjU
Norm
The Hook
ReplyDeleteYou may be right. I am simply pointing out a pattern, and highlighting what it means if it were to repeat.
I wish T-Theory told us to BUY in August instead of be aware of the bigger correction to come, I think the prediction was 950 SPX then. Nice.
ReplyDeleteAlthough it's nice to be aware of long term patterns, such as thinking the market MIGHT crash in 7 months IF the historical patterns hold, I wonder how people incorporate that information into trading decisions today? Personally, the more I study this stuff, the more I try to let the market tell me what it is doing NOW, not trying to guess what MIGHT happen at some point in the future.
ReplyDeleteAs for me I have been long copper and cotton for the past two weeks and those trades have been profitable. I also tried trading the dollar but got wip-sawed out of two positions. For those of you guys have let bad positions hurt your account, the total loss to my account from the dollar trades was 0.5% of my account. If things don't go my way quickly, I'm out.
I also made a VXX trade on the day that the Money Flow T's said the S&P was to begin it's decline. That trade went against me immediately and stopped me out at a 0.5% loss as well. Luckily, my profits from cotton, copper and a DBA trade have been 2.5% of my account.
Marketlive, you just can't let that bad T-theory call go, can you? :-) For what it's worth, I got burned by that call too. I was actually on vacation when the rally started and when I came back and looked at the charts, everything was showing bullish patterns according to the various indicators and ratios I follow. However, I didn't buy in because I was expecting the rally to fail quickly. After all, we were entering an the beginning of an depression based on the 80 year defaltionary cycle, right?
ReplyDeleteAll that said, I learned a lesson. We're responsible for our own trading decisions. If you trust your own analysis, one should be VERY cautious in taking a position (or failing to take one) because of someone else's prediction. Those predictions are something to be aware, not taken as gospel. I suspect you may have already adopted this mentality, as I have, but you don't need to keep picking on Terry. It could simply be that the theory works under "normal" conditions (if there is such a thing), but the unprecedented government intervention in the economy has thrown off prior measures of likely market action. Who knows? In the end, the only thing that matters is what price is doing now. Best of luck with your trading.
If you generate a Gann Sq9 starting from the August 1982 low of SPX 102 going 19 levels (use the generator at this link and you can do it yourself http://mysite.verizon.net/bonniehill/pages.aux/gann/sq9.html ) it has caught nearly every intermediate turn. The 2007 ATCH of 1565 is on the 180 degree cardinal cross, the Oct. 10, and Nov. 21 2008 lows are on the zero degree cardinal cross, the March '09 low of 666 is on the 90 degree line. Most recently the Nov. 29 low of 1174 is on the 270 degree line and one level up is 1309,a possibility for the top of the rally. IF, and right now its a BIG IF, this is either Primary wave 2, or Primary wave "B" (my preferred count) then the large "C" wave should end at or around 319 on the 180 degree line, and fill the gap from the Jan. 1991 liftoff when Gulf War 1 began on aSunday night and the gap occurred the following morning. that is the most bearish count for the moment. My alternate is a print of 597, which is on the 180 degree line down from the 1565 ATCH, and amazingly is exactly .382 x 1565. for now the likely scenario is a big move up into January 7th which is a large Spiral Calendar date and potentially the high of the move. Sentiment and bearish divergences, most of which have been mentioned here by participants, would argue for a top of some significance in the next couple of weeks.
ReplyDeleteClaudius
ReplyDeleteI don't understand that Gann square. There is no standard square root relationship at each 360 degree turn.
Norm, Thanks for the Youtube video above that put me onto this related one. I have been laughing out loud and can't stop!
ReplyDeletehttp://www.youtube.com/watch?v=PTUY16CkS-k&NR=1
Forward,
ReplyDeleteThanks for the comment and for the great link. I was beginning to wonder if anyone here had a sense of humor!
Norm
In fact, I'm in a good mood for the rest of the day. It helps to laugh. A lot of people on this blog seem to be miffed that T theory did not make them a fortune because T13's end did not cause a depression. I too must admit that it's been hard to accept. But I guess it's better this way, even if my account is smaller now.
ReplyDeleteDoes this mean that we can just go long, 40 times leveraged, like in the old days and go to sleep for 20 years, wake up and have all the money in the world?
Forward,
ReplyDeleteGlad you're enjoying your day! For the record, I will not be buying the dips unless last week's highs are taken out.
Norm
I was working with the Spiral Calendar program using various panic dates and wondered about the Sq9 using a panic low price. I understand the sq rt relationships of both the basic Sq9 and sq12 with a starting point of 1 in the center square, but it can also be applied using either a major high or low. I have programs that calculate both forward and backward sq9 just like the SC forward and backward spirals.
ReplyDeleteanyhow, I experimented and it worked, producing an amazing matrix with some Fibonnaci symmetry and catching major turns. As i said yesterday, the ATCH of 1565 x .382 is 597 which lies several levels down on the same cardinal line, along with 141 the sq rt of 2.
On the 270 degree line are 382, 619 (close enought to .618) which is also the sq.rt of .382, 1047 which is 1/3rd of pi, and 1309 which is 1/2 of 2.618. there is probably a lot more, I just haven't taken the time to explore.
When I stumbled across this a couple of years ago another trader suggested I use the 1974 low as he thought it was the orthodox wave 4 low, I tried and nothing happened. I plugged in the 1982 low and, SHAZZAMM.
Thanks for the explanation, Claudius.
ReplyDelete