iamthewolf

Market Outlook - August 2020: Bear Markets and History

SPCFD:SPX   S&P 500 Index
Knowing, after the fact, the March decline was extraordinary I began tracking an inevitable recovery. In anticipation I had identified 14 historic declines of similar magnitude over the last 100 years. The current event became 15.

A key milestone of recovery is the eventual cross of MACD / PPO vs related signal line (e.g., fast vs slow Exponential Moving Averages). From that event forward I then track weekly recovery by % gain/loss and include an average gain/loss. The process uses weekly data.

The crossing event happened 5/18/2020 (indicated by Red arrow for MACD at bottom and Yellow arrow as "start" date/price). At present, 11 weeks later, the subsequent gain is closely tracking the Average gain/loss of the prior 14 events.
  • Average of prior 14 events: +10.85% at week 11
  • 2020 event: +10.68% at week 11
The Average gain/loss at week 52 (after crossing) is +34.44%. I've shown the potential target area in 2021 as "end" with a second Yellow line.

Note the "start" for comparison is at the MACD /Signal crossing event on 5/18/2020, which is after the market's earlier bottom, and is the case for the comparative 14 events. This event's bottom was in March 2020. Thus the +10.68% gain from 5/2020 forward is incremental to substantial gain from March to May. Same will be true for whatever outcome occurs by week 52 in 2021.

Not a promise, but would be very nice to see that magnitude of gain by 5/2021. The majority of the 14 prior events track higher, with those having a rapid start continuing to outperform.

The 2020 event ranks 5th after week 11.

Comments

How about those events in comparison to election years/months?
+3 Reply
iamthewolf mycoinmoon
@mycoinmoon, You decide. here are all 15 dates of "crossing" as "start" point. 9/5/1921
7/18/1932
7/29/1940
5/18/1942
1/6/1958
8/13/1962
10/24/1966
7/20/1970
10/28/1974
8/16/1982
1/25/1988
11/5/2001
10/21/2002
3/23/2009
5/18/2020
Reply
Hey can you tell me the names of these two indicators you used PPO and RQ %? I'd like to look more into how they work.

Great use of Fib, MA, RSI and trend lines. Very interesting chart.
+1 Reply
@Baidis, Thanks. The PPO Indicator is in the Public list of Indicators at TradingView. "RQ" is a custom indicator based on something a colleague shared. The formulas is ATR(n)/Price, meaning "Return Quotient (RQ). You choose the "n" days for ATR, where my colleague suggests 5.
+1 Reply
@Baidis, PPO = % price oscillator, RQ...dunno sorry
Reply
iamthewolf markjamescleland
@markjamescleland, See me reply comment above to @Baidis
Reply
In my opinion, one can't compare all declines with each other by their % number or that a certain line was crossed. The context in which they take place can give decisive indications.
FWIW here's just a different thought, although nobody knows the future anyway
Reply
iamthewolf ReallyMe
@ReallyMe, Thanks for sharing your view. Feel free to make your point, but keep your content for your own publishing.
Reply
This tracks nicely with my supercycle thought from April of 2019. Take a look and please comment.
Reply
Very interesting!
Reply
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