Market Outlook - October 2020: Tracking History (Update)
This month continues tracking today's market vs 14 historic declines of similar large magnitude occurring over the last 100 years. The current event is number 15.
Starting at highlighted cross of MACD / PPO vs Signal line we compare today's recovery #15 to 14 previous events and their average behavior. The process uses weekly data.
The current crossing event happened 5/18/2020. At present, now 19 weeks later, the path of event 15 is closely tracking the Average gain/loss of the prior 14 events.
Note the "Start" yellow arrow for comparison at the MACD /Signal crossing event on 5/18/2020 (Red arrow under PPO), which is after the market's bottom in March 2020. The same approach is used for comparison to 14 historic events. Thus the +13.30% gain from 5/18/2020 forward is incremental to substantial gain from March to May 2020. Same will be true for whatever outcome occurs by week 52 in 2021.
The Average gain for the 14 historic events at week 52 (forward from time of MACD / PPO crossing) is +34.44%. I've shown a potential target area in May 2021 as "end" for week 52 using a second Yellow arrow.
The 2020 event ranks in the middle of all previous events after week 19. The majority of the 14 prior events track higher as time passes, with those having a rapid start continuing to outperform the average of all 14.
Periodic market changes forward can be monitored using technical measures for further guidance, such as RSI 14. I've added a red arrow (bottom) at today's date to highlight current RSI near the midline at 50 to reflect a healthy pullback in September 2020. A glance back at May - August 2019 shows similar pullbacks for support near RSI = 50 while PPO remained above 0 despite several up/down crossings of PPO/Signal lines.
The trajectory of event 15 is tracking closely with history. Longs and those with patience will be pleased if it continues that path.
Starting at highlighted cross of MACD / PPO vs Signal line we compare today's recovery #15 to 14 previous events and their average behavior. The process uses weekly data.
The current crossing event happened 5/18/2020. At present, now 19 weeks later, the path of event 15 is closely tracking the Average gain/loss of the prior 14 events.
- Average of prior 14 events: +14.04% after week 19
- 2020 as 15th event: +13.30% after week 19
Note the "Start" yellow arrow for comparison at the MACD /Signal crossing event on 5/18/2020 (Red arrow under PPO), which is after the market's bottom in March 2020. The same approach is used for comparison to 14 historic events. Thus the +13.30% gain from 5/18/2020 forward is incremental to substantial gain from March to May 2020. Same will be true for whatever outcome occurs by week 52 in 2021.
The Average gain for the 14 historic events at week 52 (forward from time of MACD / PPO crossing) is +34.44%. I've shown a potential target area in May 2021 as "end" for week 52 using a second Yellow arrow.
The 2020 event ranks in the middle of all previous events after week 19. The majority of the 14 prior events track higher as time passes, with those having a rapid start continuing to outperform the average of all 14.
Periodic market changes forward can be monitored using technical measures for further guidance, such as RSI 14. I've added a red arrow (bottom) at today's date to highlight current RSI near the midline at 50 to reflect a healthy pullback in September 2020. A glance back at May - August 2019 shows similar pullbacks for support near RSI = 50 while PPO remained above 0 despite several up/down crossings of PPO/Signal lines.
The trajectory of event 15 is tracking closely with history. Longs and those with patience will be pleased if it continues that path.