This prediction is purely based on previous bear markets / recessions and the impact it had on the S&P500 index. The chart is based on the monthly price. If the current crisis is (or will be) one of the biggest crisis in the last 100 years, like predicted by many (permabears), chances are that we are already in a bear market and heading for a recession that could last for years.
I found only 5 moments in history were the S&P500 traded in oversold territory, when looking at the montlhy, starting from the great depression in 1929 --> * 1932 * 1970 * 1974 * 2002 * 2009
If the S&P is heading to oversold territory again, and looking at the current trend on the RSI, this would occur somewhere in 2022 (very rough estimate, will off course change over time).
There is also a clear bearish divergence visible on the chart (red lines, rising stock price and falling RSI). The only other moment in history this happened was during the recession following the dotcom bubble (orange lines). It took the S&P around 900 days before it found a bottom and a new bull market started.
Based on the above information and the falling wedge on the chart (purple lines):
* In the best case my analysis is completely wrong and we take of for another bulllrun right now;
* In the bad case we do have another major drop in the S&P and it takes about a year to find a bottom (started Feb2020), the S&P could find a bottom at around 2020 points in March 2021;
* In the worst case and a similar scenario unfolds like after the dotcom crash, it could take more then 2 years before the S&P finds a bottom, that could be around 1805 points in July 2022.
Off course we have the FED who has our backs! If things go wrong, the FED will print is back into happiness! Thank you FED. Or will QE infinite backlash and cause a market decline for decades, similar to what happened to Nikkei 225 index of Japan in December 1989? Only time will tell.
One thing I'm sure of is that we are heading for some turbulent times. 2020 is an election year in which anything can happen, the upcoming quarterly earnings of many companies will not be pretty, it will take a long time before the unemployment numbers will recover, lot's of (small to midsize) businesses will go bankrupt, we might be heading for trade war 2.0 with China, a second global Covid-19 wave might force many countries into a second lockdown, finding a vaccine for the virus + production + inoculation of enough people will probably take another year, ...
Curious about your ideas...
I found only 5 moments in history were the S&P500 traded in oversold territory, when looking at the montlhy, starting from the great depression in 1929 --> * 1932 * 1970 * 1974 * 2002 * 2009
If the S&P is heading to oversold territory again, and looking at the current trend on the RSI, this would occur somewhere in 2022 (very rough estimate, will off course change over time).
There is also a clear bearish divergence visible on the chart (red lines, rising stock price and falling RSI). The only other moment in history this happened was during the recession following the dotcom bubble (orange lines). It took the S&P around 900 days before it found a bottom and a new bull market started.
Based on the above information and the falling wedge on the chart (purple lines):
* In the best case my analysis is completely wrong and we take of for another bulllrun right now;
* In the bad case we do have another major drop in the S&P and it takes about a year to find a bottom (started Feb2020), the S&P could find a bottom at around 2020 points in March 2021;
* In the worst case and a similar scenario unfolds like after the dotcom crash, it could take more then 2 years before the S&P finds a bottom, that could be around 1805 points in July 2022.
Off course we have the FED who has our backs! If things go wrong, the FED will print is back into happiness! Thank you FED. Or will QE infinite backlash and cause a market decline for decades, similar to what happened to Nikkei 225 index of Japan in December 1989? Only time will tell.
One thing I'm sure of is that we are heading for some turbulent times. 2020 is an election year in which anything can happen, the upcoming quarterly earnings of many companies will not be pretty, it will take a long time before the unemployment numbers will recover, lot's of (small to midsize) businesses will go bankrupt, we might be heading for trade war 2.0 with China, a second global Covid-19 wave might force many countries into a second lockdown, finding a vaccine for the virus + production + inoculation of enough people will probably take another year, ...
Curious about your ideas...