The Mother of All Analogs

• Posted by Danny
• on January 22nd, 2012

Will history repeat itself on a technical scale of such magnificent proportions?

 

I’ve recently noticed a few people busting out the chart analogs. They’re pretty cool to dissect and fascinating to study when the ups and downs over comparative periods seem to match-up so precisely. Trying to predict the future off of them can be precarious though, because they work until they don’t work.

It often seems to me that a “perfect” analog isn’t picked up on until it has reached the point where it’s already “obvious”. By then it’s probably not very useful and is just fun to look at in hindsight. But who knows…

Peter Brandt (@PeterLBrandt) pointed to a recent analog he picked up on here. Check it out…he also describes what analogs are and how they may be used far better than I can.

A couple weeks after the big market sell-off last August, I posted a couple S&P scenario charts comparing roughly 1965-1975 to 2000-present. Not that they mean a damn thing about where the market goes from here, but they are interesting to check out in that they cover such a prolonged period of time with some of the largest percentage pullbacks in history.

Here we are about six months later, and if I had to guess (and were superstitious), I’d say the chart scenario below is most analogous going forward. Probably just wishful thinking though.

(click to enlarge)

 

What do you think?

 

 

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