The 13th of August – A Night of Black Magic and Voodoo Charts

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  • on August 13th, 2011

With all the excitement, volatility and technical madness in the markets over the last couple weeks, we just couldn’t resist dredging up the uncanny similarities in the chart action of the S&P ($SPX) from ancient times to the chart action of the recent decade.

The following are two scenarios that could play out if you are superstitious…and to be a chartologist you must be.  :)

 

Scenario 1

On August 2, we posted this chart below on Chartly. It compared the two big dips between 1970-1975 to the pair of severe pullbacks we had between 2000-present. The little dipper (purple arrow) that took place in the summer of ’75 may be the evil twin of last summer’s dip to around 1,020. That little dip in ’75 was tested in early ’78, but never broke through.

If you believe in this technical magic, perhaps we are about to (or already have) tested the July ’10 recent low. If so, bullish glory awaits us all!

(Click to enlarge)

GOOD

 

 

Scenario 2

This situation is dire indeed. We stretched back a little farther in time to show the correlation in the three big pullbacks starting in 1966 through the end of 1974.

The black arrows show where we may be today, compared to then, on the cursed timeline. If so, we’ve got a hellacious pullback in our near future that will make March ’09 look silly. Yet there is a silver lining – before we crash and burn the S&P will break all time highs.

(Click to enlarge)

BAD

 

Will history repeat itself on a technical scale of such magnificent proportions, or is it just a wicked coincidence thus far? All I know is this – if the markets set all time highs within the next year or so, my ass is going to 100% cash.

Enjoy the rest of your night…and summer.

The end.

 

 


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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