One more chart, historically going back to 1960 every 20% "retracement" from the lowest close resulted in a bull market
except one, in 2002.
The S&P has now seen a rise of over 20% on a weekly timeframe...what does history mean in this case?
The chart attached is on a log scale in order to show the relative rise and fall along with a 20% zig zag overlayed. I've highlighted in 2002 where in hindsight we can see this did not quite pan out
(2020-04-13, 04:58 PM)malaguti Wrote: One more chart, historically going back to 1960 every 20% "retracement" from the lowest close resulted in a bull market
except one, in 2002.
The S&P has now seen a rise of over 20% on a weekly timeframe...what does history mean in this case?
The chart attached is on a log scale in order to show the relative rise and fall along with a 20% zig zag overlayed. I've highlighted in 2002 where in hindsight we can see this did not quite pan out
Last One I promise...this time with the ichimoku cloud overlayed and the zig zag
The ichimoku cloud is also able to distinguish when a bull market has resumed, without exception every time there has been a confirmed bear market (drop of 20%) the ichimoku cloud has never been wrong since 1960 in recognising the bottom
(2020-04-13, 04:58 PM)malaguti Wrote: One more chart, historically going back to 1960 every 20% "retracement" from the lowest close resulted in a bull market
except one, in 2002.
The S&P has now seen a rise of over 20% on a weekly timeframe...what does history mean in this case?
The chart attached is on a log scale in order to show the relative rise and fall along with a 20% zig zag overlayed. I've highlighted in 2002 where in hindsight we can see this did not quite pan out
Last One I promise...this time with the ichimoku cloud overlayed and the zig zag
The ichimoku cloud is also able to distinguish when a bull market has resumed, without exception every time there has been a confirmed bear market (drop of 20%) the ichimoku cloud has never been wrong since 1960 in recognising the bottom
Every time when more than 15% of stocks were above their 200 MA, after first falling below, on the weekly the bottom was in. It looks to me we have made bottom and may not revisit unless I am reading this incorrectly. Maybe someone else can find a flaw in my interpretation.
(2020-04-13, 07:27 PM)marry123 Wrote: Every time when more than 15% of stocks were above their 200 MA, after first falling below, on the weekly the bottom was in. It looks to me we have made bottom and may not revisit unless I am reading this incorrectly. Maybe someone else can find a flaw in my interpretation.
Personally I would suggest using closing data only on the percentage of stocks, as it filters out the noise of brief spikes into the lower zone. I've used the same chart as yours which is the S&P 100 percentage of stocks above their 200 day MA. Which is mega caps only and a very small sample of the market.
This is why I show both the NYSE and Nasdaq Composite percentage of stocks above their 200 day MA in my videos, as they cover around 5000+ stocks, and hence the majority of the US market. Which is about 50+ times the size of what the S&P 100 covers. So I'd recommend looking at those two when doing breadth work. As the bigger the sample size the better.
As far as what you suggested. It looks like there's only three periods when stocks have closed below the 15% level in the S&P 100 during that Stage 4 decline including this one and then moved above it for the first time. So August 2002, January 2008, and April 2020. So neither of the previous two were the bottom.
I've attached the full chart and individual charts below of what they looked like at the time that the first moved back above 15%.
(2020-04-13, 07:27 PM)marry123 Wrote: Every time when more than 15% of stocks were above their 200 MA, after first falling below, on the weekly the bottom was in. It looks to me we have made bottom and may not revisit unless I am reading this incorrectly. Maybe someone else can find a flaw in my interpretation.
Personally I would suggest using closing data only on the percentage of stocks, as it filters out the noise of brief spikes into the lower zone. I've used the same chart as yours which is the S&P 100 percentage of stocks above their 200 day MA. Which is mega caps only and a very small sample of the market.
This is why I show both the NYSE and Nasdaq Composite percentage of stocks above their 200 day MA in my videos, as they cover around 5000+ stocks, and hence the majority of the US market. Which is about 50+ times the size of what the S&P 100 covers. So I'd recommend looking at those two when doing breadth work. As the bigger the sample size the better.
As far as what you suggested. It looks like there's only three periods when stocks have closed below the 15% level in the S&P 100 during that Stage 4 decline including this one and then moved above it for the first time. So August 2002, January 2008, and April 2020. So neither of the previous two were the bottom.
I've attached the full chart and individual charts below of what they looked like at the time that the first moved back above 15%.
Interesting fact is that if the stock market rallies over 50% from bottom, the bottom is in and bear market is over (we have rallied 50% right now so need to see if we can get over 50%). This has happened 20 of 20 times in the past. This data is from legendary trader Larry Williams who on March 17 became bullish and called the market bottom. He does not think we will see another low based on all his technical indicators.
Here is Larry Williams saying the bear market was over March 17 with all his data to back him up (he called the bottom right before it bottomed): https://www.youtube.com/watch?v=ztk3Ti-4yO4
(2020-04-13, 10:18 PM)marry123 Wrote: Interesting fact is that if the stock market rallies over 50% from bottom, the bottom is in and bear market is over (we have rallied 50% right now so need to see if we can get over 50%). This has happened 20 of 20 times in the past. This data is from legendary trader Larry Williams who on March 17 became bullish and called the market bottom. He does not think we will see another low based on all his technical indicators.
It was interesting, and he might be right. But in Stage Analysis we use the Weight of Evidence for Market Timing (chapter 8 in the book), and so far the short term is bullish, and the medium and long term remains on bearish signals, whereas from the Stages point of view all major indexes are in Stage 4. But if that changes. I'll change with it. But for now the asset classes in Stage 2 are US Treasuries and Physical Gold, and Stocks Indexes are in Stage 4. So the methods rules tell me to avoid stocks for now or to even go short them if they pull back to the Stage 4 breakdowns levels and start to rollover again, and to stay long physical gold and treasuries while thy remain in Stage 2 uptrends.
This is the point of having a defined method like Stage Analysis, as when things crazy and there's noise from all around in the financial media, the TV and on social media etc. You always have a playbook of what you should be doing at that point in time. But I understand that it's easy to be templated to do other things as we are not machines. But personally I prefer a time tested method, as that's what gives you an edge over the long term, even if you miss the occasional short term gain.
isatrader
Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
(2020-04-13, 10:18 PM)marry123 Wrote: Interesting fact is that if the stock market rallies over 50% from bottom, the bottom is in and bear market is over (we have rallied 50% right now so need to see if we can get over 50%). This has happened 20 of 20 times in the past. This data is from legendary trader Larry Williams who on March 17 became bullish and called the market bottom. He does not think we will see another low based on all his technical indicators.
It was interesting, and he might be right. But in Stage Analysis we use the Weight of Evidence for Market Timing (chapter 8 in the book), and so far the short term is bullish, and the medium and long term remains on bearish signals, whereas from the Stages point of view all major indexes are in Stage 4. But if that changes. I'll change with it. But for now the asset classes in Stage 2 are US Treasuries and Physical Gold, and Stocks Indexes are in Stage 4. So the methods rules tell me to avoid stocks for now or to even go short them if they pull back to the Stage 4 breakdowns levels and start to rollover again, and to stay long physical gold and treasuries while thy remain in Stage 2 uptrends.
This is the point of having a defined method like Stage Analysis, as when things crazy and there's noise from all around in the financial media, the TV and on social media etc. You always have a playbook of what you should be doing at that point in time. But I understand that it's easy to be templated to do other things as we are not machines. But personally I prefer a time tested method, as that's what gives you an edge over the long term, even if you miss the occasional short term gain.
Thanks Isa, am waiting patiently along with you for the proper signal based on stage analysis.
