'Fun' with charts & bears

An interesting outcome of the current ‘bear’ market is that the ‘waves’ of up and down so far have been somewhat tracking the 2007-2009 bear (if somewhat compressed on the time scale). From the 3rd January 2022 S&P500 peak of 4796.56 there have been two significant shorter term peaks of 4631.6 on the 29th March & 4305.2 of the 16th August. 2007-2009 followed a similar pattern on the 9th October 2007, the 10th December 2007 & the 19th May 2008. See the picture below.

So what could we learn from this? Almost certainly nothing … as there’s no real reason - other than perhaps human psychology - as to why 2022 should follow the trajectory of 2007-2009. However for fun & giggles - cause we need some of that now - what could we learn if we buy into this almost absurd comparison?

  • Firstly we’d expect a few more days - perhaps a week - of lower S&P500 quotes with moderate numbers of stocks hitting new 52w lows and some slightly panicked headlines.

  • Then a slight ‘bump’ of perhaps two-three weeks and then in about a month or slightly more a decline to start and on this leg down real panic to set-in causing a large rapid drop in the market down to circa the 2020 lows. This would be the main ‘stock vomit’ phase discussed earlier this year with a good string of major bottom signals.

  • After that drop had resolved itself - the stock vomiting having subsided - would represent a good time to re-enter the market for a ‘bear market bull’ bounce - with caution as there could be another down leg later - so some interim profits could be made.

Just an absurd comparison - so lets all watch this space!

6 Likes

Did you see this image I shared on another thread? (2001, 2008 and 2022 overlaid)

6 Likes

I did :slight_smile:

Extra characters so my post goes through the new 20 char min.

John

2 Likes