2001 and 2008 all over again?

Many have wondered if it is 2008 all over again. Some say yes, others say resolutely no. Here we simple look at the facts and data.  Figure 1 shows the S&P500 from late 2007 through mid 2008 in the top right, while the lower left shows the SPX from mid-2015 through early 2016.

Fig 1: Early 2008 vs early 2016 (click to enlarge in new tab)

2008 vs NOW

 

Indeed and clearly we can see many similarities (blue arrows; points lost and gained, trendlines, etc), but also several dissimilarities since -of course- the market will never unfold according to the exact same play book. That be too easy, wouldn’t it. 😉  The largest difference is that in late-2007 the market started off with a zigzag correction of the first move down off the ATH, whereas in late-2016 the correction was a flat. Fast forward, in early-2008 the market then saw a flat (on a closing basis), whereas we recently went through a zigzag correction. Hence, it appears the corrective waves are alternating between “then” and “now”. Otherwise, like in 2008 there was a double bottom in mid-March, now we have double bottom in mid-February. In 2008 the market then rallied a whooping 6.7% (85p) in a matter of actually less than 2 trading days (yellow box). With the futures market currently already up 4.6% since the low was struck last Friday; it appears the market still has some steam left before correcting more heavily;

Back in late-January we already showed with some simple means the market is currently in a bear market, and these “crazy” spikes in price are rather a symptom of it, then a cure. If we look at the NYA, things actually even worse: See Figure 2.

Fig 2. NYA monthly chart since 1980. Price dropping below critical long term trend line support

NYA monthly SMAs What we can observe is that price dropped below the 20m SMA summer 2015, down to the 50m SMA, where it found support. It then rallied back to the 2om SMA for a (failed) retest and is now well below the 50m SMA. In fact, this setup looks clearly a lot like that in early 2008. Back then there was no turning back… However, in 2001 the same happened, and price did a retest of the 50w SMA before failing. Hence, it appears to be a coin toss right now, what the market will do, though a (failed) retest of the 50w SMA appears most likely given current market sentiment, indicators, breath, etc.

But, make no mistake, once that retest fails the 150m and 200m SMA are most likely next.

As you notice, Intelligent Investing tracks many lines of evidence to determine the market’s next big move, Elliot Wave, S/R, TIs and TAs are several of them. Holistic objective analysis allows us to be on the right side of the market more often than not, without any preconceived notion or opinion. We use just the facts. Just like we did here! Do you want to be on the right side too? Of course! Then please join us here.

 

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