I would like to offer up one potentially very grim analog:
Slope of Hope Blog Posts
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A Santa Claus rally. A trade deal between China and the U.S. A straight shot to 3,200 on the S&P 500. The bullish stories are flooding the airwaves. After all, the vast majority of “traders” and “investors” have never experienced a bear market before. Equities dipped a little in October, and people don’t like it. So they’re trying to wish it away.
Maybe they will. Maybe the won’t. We remain at a crucial juncture. Last week was largely a waste of time. We did get a nice selloff on Monday, but after that, it was a circle jerk, with desperate rumors from D.C. about a trade deal attempting to prop things up.
On the ES, the two tinted areas are all I care about right now. If, God forbid, we cross above the yellow tint at about 2757, the bulls are going to grab the baton. It wouldn’t take much in the way of news to make it happen. Another plausible rumor about China would do the trick, although the way Pence is handling it, maybe I shouldn’t worry so much. A failure of the green line at 2711 would shove a silver stake through the pattern’s heart. (more…)
I feel a little silly with all these Premium Posts, since I warned you last last week that I’d be quiet since – – let’s face it – – a market this oversold isn’t exactly chock full of great shorting opportunities. All the same, here’s another one I like: American Axle and Manufacturing Holdings (AXL). Check out the analog:
Lifetime highs are tricky beasts, because it’s difficult to assess just how much higher values will climb since, by definition, you are in uncharted territory. The psychology is obviously very positive, since all equity buyers are winners, and that tends to feed on itself. But I was curious if there was any portion of market history which resembled what has happened recently on the S&P 500: