Monday, 3 December 2012

S&P 500 watch the decline from October 18, is it analogous to the decline from 2007's peak? (updated)

Big picture chart first up, to set the scene.

With the S&P 500 turning down from the top of the trading range that has captured market price action since mid 1997 (!), might the current decline be somewhat analogous to the decline from the 2007 peak? It's early days, but so far that possibility remains on the table, as illustrated by the following daily charts.

First chart shows the initial decline from the 2007 peak to the end of March 2008.

Next chart shows the decline from the October 18 2012 high. If the analogy continues, we should see further rally in to mid December, then down hard.

Why am I following the decline from October 18 2012 and not the September peak? My two favourite wave analysts believe a new multi-year S&P 500 bear leg started in late October (Robert Prechter) or early November (Glenn Neely), with the earlier possibility being October 18. Like all analysts, they get some calls right, and some calls wrong, but currently their analysis dovetails nicely with my big picture monthly chart.

Does this post mark a return to regular and frequent Avid Chartist posts? No. I will post somewhat irregularly, as the mood takes me. Why? I have been finished uni for more than half a lifetime, but I still miss the lazy summers I enjoyed back then. This summer the urge is strong to relax, with much time enjoying the company of family and friends, reading, watching the cricket, enjoying the beach etc. So Avid Chartist will take a back seat for a while.