USE NEW THREAD!! TA: Technical Analysis & Charting (3150+)
- CaptRon
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- Ronjamm
- Ronjamm
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- cmag1
- CaptRon
- Kirk
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» CaptRon - Luskin - S&P history
FWIW:"Unnatural History
If you think the market can't get much worse, history says you're wrong.
After the last two horrible quarters, many of us are probably telling ourselves that it can't get much worse than it's been. For those of us who believe that as an unquestioned article of faith, let me give you a little history lesson. You'll see that it can get a lot worse than this.
For our little history lesson we'll focus on the S&P 500, because that pretty much represents the entire US equity market. Obviously the NASDAQ has had it a lot worse -- but that's only a subset of the total market, and it's fairly concentrated in a single broad sector: technology. In subsequent commentaries the NASDAQ will get its turn in the historical spotlight.
Over the last two quarters the S&P 500 lost 19.23%. As horrific as that has been, that actually only ranks 78th out of the 2409 six-month periods since 1800. Believe it or not, there have been 77 that were worse.
There were eight six-month periods in which the S&P 500 lost more than 40%. There were 18 in which it lost more than 30%. The very worst single six-month period was the one ending May, 1932, in which the S&P 500 lost an astonishing 52.92%.
Of the 77 six-month periods worse than the most recent one, 21 were before 1900, and none of them were during the Civil War. 33 (including the very worst 4) were in the 1930s, in the Great Depression that followed in the wake of the stock market crash of 1929.
The worst six-month period in the modern era ranks 13th overall. It was the one ended September, 1974, with the S&P down 32.39%. 4 others were in the 1970s.
The most recent period worse than the last six months ranks 73rd. It was the one ended March, 1988, with the S&P down 19.56%. That means that in the 1990s there were no six-month periods worse than the most recent six-month period.
This shows that what we've experienced over the last six months is by no means as bad as it could have been, or could still be. But at the same time it shows that market performance this bad is extremely rare. The S&P 500 has done this badly (or worse) only 3.2% of the time over a span of 200 years. But don't let any of that make you think it can't get worse.
It can. Of the 77 six-month periods worse than the most recent, the S&P went down further during the next six months 24 times -- losing an average of an additional 18.24%.
Okay, so the bad news is that, based on history, we've got about a 1/3 chance of things still getting worse over the next six months. But of course the good news is that we've got, on the same basis, a 2/3 chance of things getting better.
But not that much better. Over the 53 times the S&P rose over the next six months, it only rose an average of 18.38%. Even if that happens now over the coming six months, that's not going to make up for the 19.23% loss of the last six months. And don't forget about the bad magic of compounding losses. If you start with a dollar and you lose 19.23% of it, you've got 80.8 cents left. It that then rises by 18.38%, you're only back up to 95.6 cents.
History class dismissed. Oh, and there will be a test tomorrow... (and every day)."
Stops, anyone?....
-- posted by CaptRon
» CaptRon - Velo - 15 min ago
To:Sharck who started this subjectFrom: velociraptor_ Tuesday, Apr 3, 2001 2:09 PM
Respond to of 14498
I think the following will help those who are looking for targets and wave structures....
As I have said, both the DOW and the S&P have exhibited waves 1, 2, 3, down from the high yesterday and it appears that we are now in wave 4. If you take a look at the following charts, one for the DOW and one for the S&P, you can see that I have outlined the waves as I see them in light blue. Waves 1 and 3 atre strong down moves and waves 2 and 4 are like little bubbles at the end of each down wave. We do not have 5 waves yet. In each chart, notice how long the first bubble, or wave 2 took. There should be an hourly turn sometime around 3:15pm and if you look at the charts you can see that the wave 4 bubble should end right about then if it were to be about the same length as wave 2 (dark blue lines). The next down move should complete wave 5 of this series. If you look at the length of the first 2 strong down waves for each chart (Wave 1 and 3) you can see that they have gone about 450 points off the highs for the DOW and about 55 points for the S&P. Divide these by 2 and you have about 225 points per wave for the DOW and about 27 points per wave for the S&P. Since, I like to be modest, I am estimating that the next wave down would be about 200 points for the DOW and about 20 points for the S&P. Thus, potential targets would be about 9300 for the DOW and about 1095 for the S&P.
http://www.raptorgroupresearch.com/dow5d...
http://www.raptorgroupresearch.com/sp5da...
This would be perfect as it would appear to give the misconception of a higher low off the bottom, when in reality, we have only just completed 1 series of down wave in a larger set and still have waves 2-5 to go.I suspect that wave 2 of the larger series will correct for about 2 days which should lead us into near Friday. Also perfect because there is a major turn point on April 6, and if we are trending up, it would be the best spot to begin the next hard down set of waves, which should lop off quite a few DOW points.
This is a sample of my roadmap, and how I intend to play things over the next 2 weeks or so.
-- posted by CaptRon
» CaptRon - Another Velo
Alternate to 1st post:To:Sharck who started this subject
From: velociraptor_ Tuesday, Apr 3, 2001 2:13 PM
View Replies (2) | Respond to of 14500
Following my last post....another alternative I can possibly see is that if we trend down hard now for the next hour into the 3:15 time, then we could possibly be completing wave 5 down. This would result in a smaller wave 5 that is truncated and is allowable by EW rules. If so, then the 3:15 turn point will be a turn up and we should start correcting this decline off the highs for the next 2 days or so.
-- posted by CaptRon
» Ronjamm - Re: Re: "End of Selling?"
In response to message posted by cmag1:cmag,
Disagree. CTRs in a bear can be some of the most spectacular rallies that can be had in a short period of time. Short covering helps to make it so. The key is to get in early and not get greedy (be nimble on the exit). I do agree, however, that it is much more difficult because everything happens faster than in a bull market. The CTR in January was a good example.
-- posted by Ronjamm
» cmag1 - Re: Re: Re: "End of Selling?"
In response to message posted by Ronjamm:Come on now. The January "rally." You made money on that? You have to time the bottom and time the top. Sure, it went from 55 to 68, but then it was back to 55 in a blink of the eye.
Still, my point is, timing a CTR in a bear (long) is the same as timing a correction (short) in a bull market.
It's short covering (driving the CTR) vs getting stopped out (driving the correction).
Corrections in a bull market can be fast and dramatic just like CTRs in a bear. They are the same chart flipped top to bottom.
BTW, I bought qqq at 58 going into the January CTR, and sold at 58 on the way down, so I remember how fast it came down. Stops could have been moved up more, but the volatility of the Qs right now stops everyone out who doesn't want to risk 10%-20%.
-- posted by cmag1
» Kirk - Re: In defense of TA
In response to message posted by CaptRon:BTW, kudos for defending TA to Art
You will notice that he quotes all the books saying TA doesn't work and that you need index funds as FA also doesn't work... Then he at one point went on to tell how he bought the right stocks and has done well. He never answered me in how he chose ones that went up rather than Polaroid.... Control Data Computer or..... Seem even SOME FA is needed or just a good dose of luck..
It is good when people tell you that what you are doing doesn't work... that way it will keep working. 8)
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-- posted by Kirk
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