13/03/18

"It's Time To Be Alert!"



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"It's Time To Be Alert!"
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Authored by Steven Vanelli via Knowledge Leaders Capital blog,

This is the time to be alert for any signs of a failure in the S&P 500. Why? There are two really good historical precedents to the current market configuration.

The set-up is as follows: stocks suffer a rather quick correction, bounce back, take out the previous lows and experience a waterfall decline. The period of time from the bounce-back high to a new low was seven days.

Let's look at the 1929 crash to start. The S&P 500 peaked at 31.86 on September 16, 1929. Over the next 14 days, the index experienced a 10.08% correction. Then, over the next four days, stocks bounced back by 7.54%. What followed was a seven-day period of time where stocks drifted lower, and then on October 18, 1929 the low was broken and a waterfall decline ensued. The decline from October 8, 1929 to November 13, 1929 was a 22-day waterfall decline, with stocks dropping 42.68% into November 13, 1929.

The 1987 crash was a remarkably similar experience. Stocks peaked on August 25, 1987 and then began a 7.79% decline over 18 days. Stocks then ....

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