The years denoted on the chart are the centre of each yellow circle. In each circle is the central violation of the 200 month moving average, amongst a cluster of three. You'll see the 200 month MA serves as support either side of the one circled. This is a bit of a loose use of the term support but what I mean is big recessions like this seem to result in three touches or violations of this MA. I've made a bit of a guess of the one in the 1870s but it seems a fairly clear pattern in the 1930s, 1970s and one may be emerging right now, with the first violation in 2009 according to one way of interpreting it:
Version 1
Going by the pattern, we'll have two more 200 MA intersections then we're good to go in another multi decade bull market. I don't know when, but Barron's has said 2020 will be the start of the recession. Going by the chart, to get back to the 200 month MA we will need to at least go down to 1650 on the index. This is about a 50% retraction.
Version 2
Another way to interpret it is we've had our three touches in 2009, '10 and '11. They are very close together though. In the 1930s recession, the first touch/support was in '21, the last in '42, a 21 year stretch before the next bull market. The one in '75 was much shorter, first support '74, second '78. A four year stretch. So perhaps governments have gotten more skilled at managing recessions and it's realistic to expect this one to be done and dusted in three years.
Wow, How on earth did you get data from the 1870s? also interesting chart!
ndthl
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@JamesRkaye, thanks for the comment! I spent a few hours and produced a few revisions as you can see in my ideas list :-) I wish Tradingview would allow editing of charts in ideas after more than 15 minutes from time of publishing, and allow me to delete ideas. I suppose they want to keep people honest...
Tradingview has the data back to the 1870s. Just type SPX into the ticker box and look for the Standard & Poor 500 index. This is a log chart to make it easier to compare moves across time.