Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Illuminating Stock Comparisons To Crashes In 1929 And 1987
When the stock market is performing well, we often hear calls for a 1929 or 1987-like crash. We can learn a great deal about stock market risk by comparing 2019 to bearish periods in 1929, 1974, 1987, 2000, and 2007.
Rare Recycled DeMark Count For S&P 500
How Have Stocks Performed Following Similar Signals?
Answer: https://t.co/hLK5EB5YNz
$SPX $SPY #DeMark $QQQ $IWM $SH $VXX https://t.co/HNEfEbbtlV
(a) What is the message from the bond market?
(b) Why are credit spreads a valuable tool to understand economic perceptions?
(c) How do the credit markets operate in the real world?
(d) What role does the Fed play?
Answers via clip below.
https://t.co/aKLTquUV7c
The Dow has been consolidating for almost two years and is trying to complete a successful breakout. $DIA
Click image to enlarge. https://t.co/O9QJioJqpH
The Dow has been consolidating for almost two years and is trying to complete a successful breakout. $DIA
— Chris Ciovacco (@CiovaccoCapital) November 12, 2019
Click image to enlarge. pic.twitter.com/O9QJioJqpH
Chris Ciovacco
@CiovaccoCapital
·
18m
The Dow Jones Transportation Average recently broke above a trendline that had acted as resistance since October 2018. Similar setups were followed by satisfying gains in the stock market.
Details: https://www.ccmmarketmodel.com/short-takes/2019/11/11/the-long-term-message-from-transportation-stocks
President Trump is scheduled to speak at the Economic Club of New York during a luncheon at 12 p.m. ET; possible he touches on trade/China topic. TBD.
Donald J. Trump
@realDonaldTrump
·
3h
Many of the people in DACA, no longer very young, are far from “angels.” Some are very tough, hardened criminals. President Obama said he had no legal right to sign order, but would anyway. If Supreme Court remedies with overturn, a deal will be made with Dems for them to stay!
13.4K
9.3K
34.4K
Donald J. Trump
@realDonaldTrump
·
3h
Economy is BOOMING. Seems set to have yet another record day!
5.6K
9.5K
45.5K
Donald J. Trump
@realDonaldTrump
·
3h
I will be releasing the transcript of the first, and therefore more important, phone call with the Ukrainian President before week’s end!
9.4K
10.5K
44.2K
Donald J. Trump
@realDonaldTrump
·
3h
Why is such a focus put on 2nd and 3rd hand witnesses, many of whom are Never Trumpers, or whose lawyers are Never Trumpers, when all you have to do is read the phone call (transcript) with the Ukrainian President and see first hand? He and others also stated that there was.....
3.8K
8.4K
31.5K
Donald J. Trump
@realDonaldTrump
·
3h
.....”no pressure” put on him to investigate Sleepy Joe Biden even though, as President, I have an “obligation” to look into corruption, and Biden’s actions, on tape, about firing the prosecutor, and his son’s taking millions of dollars, with no knowledge or talent, from a.....
1.6K
6K
24K
Donald J. Trump
@realDonaldTrump
·
3h
....Ukrainian energy company, and more millions taken from China, and now reports of other companies and countries also giving him big money, are certainly looking very corrupt (to put it mildly!) to me. Both Bidens should be forced to testify in this No Due Process Scam!
How do recent videos and studies help us? They help us keep an open mind about all outcomes, which increases the odds of "trading the chart in front of us"; a concept that is reinforced via constant repeating of "day by day". Nothing has changed...day by day.
Quote Tweet
Chris Ciovacco
@CiovaccoCapital
· Oct 29
If we understand the "how could" cases below:
(1) Stocks drop like a stone over next 2 yrs.
(2) Stocks shock on the upside for the next 2 yrs.
(3) Stocks go sideways for the next 2 yrs.
It is much easier to remain flexible and open-minded.
Market has moved back to the first gap (partial fill). Gap below is also in "partial fill" mode.
S&P had a gap open Monday and still has a partially filled gap from October 11. Markets typically like to revisit/retest gaps and/or fill gaps. Just good to know from a psychological perspective. Market will decide how it wants to handle them. $SPX https://t.co/lA0OmJkE6H
"Powell's take regarding Brexit and China improvement/trending-in-a-better direction seems to align with market's take over last 60 days. Risks remain in both areas, but some headway has been made. "
Last time they lowered 25 basis, I tried being a knowledgable trader, LoL
https://photos.app.goo.gl/KH3q1swrxAzo2aaV6
Market pricing in 97% odds Fed cuts by 25 basis points tomorrow. If that happens, focus will be on how Powell describes future guidance. All TBD. Will see what happens and market's reaction.
Agreed
Picking exact bottom is very difficult for me too.
Are you listing to Trump in Chicago? He is going off, so good, bwhaaaaa
During the most powerful bullish trend, we can say everyday "a top is close".
During the most damaging bear market, we can say everyday, "a bottom is close".
Day by Day. Will see how it plays out.
Let us all pray
Please help surfcat live that long, heck I'll be stoked with ten more years, hahaha
If you do not have a Twitter account.
A New All-Time High viewed in isolation tells us very little about the market's long-term prospects. New ATHs can be printed for years and years during a secular trend.
$SPX $SPY #Markets https://t.co/v2wrooIC6H
A New All-Time High viewed in isolation tells us very little about the market's long-term prospects. New ATHs can be printed for years and years during a secular trend. $SPX $SPY #Markets pic.twitter.com/v2wrooIC6H
— Chris Ciovacco (@CiovaccoCapital) October 25, 2019
Similar to the "China called and said they want to negotiate" story from August, market most likely cares that current trend is for less animosity and lower stress versus more animosity and more stress. Headline below from earlier this morning. #ToneAndTrendInTalks pic.twitter.com/qi8ZqmpBCt
— Chris Ciovacco (@CiovaccoCapital) October 25, 2019
CC"On August 27 the tone and trend in the trade talks had shifted. S&P closed at 2869 on August 27. Since then, the tone and trend in markets have also improved with last trade of 3025. Day by Day."
The expression "breakout to new all-time high" sounds bullish. However, when FLOT's breakout (left below) is viewed on a relative basis, it looks quite a bit different. The same concepts apply to any two symbols, including stock ETF vs. stock ETF. May cover concept in video. https://t.co/LZOe4PYk8h
"If you stay invested in a money market, your balance is regularly "breaking out to a new all-time high." #Perspective
Thus far, have not seen anything to discount the "keep an open mind" thrust theory covered on January 21. Will most likely tie concepts into the bigger picture in this weekend's video. TBD. Day by Day. "
https://t.co/MHbeElruR6
The market has frustrated both bulls and bears in recent months. We have not seen a clean breakout, nor a clean breakdown. The market will decide when it is ready and not a moment sooner.
Our odds of sound execution will increase if we can remain calm, patient, and level-headed when others are frustrated, impatient, and irrational.
Market odds for rate cut on October 30 currently stand at 92% (via CME).
Day by day
Both bulls and bears are being frustrated.
Feds injected - The Federal Reserve Bank of New York injected $99.9 billion in temporary liquidity into financial markets Tuesday https://t.co/JhJnBU2Lk2
Phil's tweet reminds us there is a big difference between looking for charts that make us feel better and looking for charts that help us stay aligned with the market.
Market odds for rate cut on October 30 currently stand at 92% (via CME).
October 18, 2019
DEMOGRAPHIC SWEET SPOT SAYS BULL MARKET COULD LAST UNTIL 2035
https://www.ccmmarketmodel.com/short-takes/2019/10/18/demographic-sweet-spot-says-bull-market-could-last-until-2035
THIS IS WHAT A MAJOR TREND REVERSAL LOOKS LIKE
https://www.ccmmarketmodel.com/short-takes/2019/10/15/the-six-most-powerful-charts-on-wall-street
Since the S&P 500 made an ATH in July, thus far, selling conviction has not been strong enough relative to buying conviction to generate a close below any of the common market retracements shown below. $SPX pic.twitter.com/LZZoBpH7WS
— Chris Ciovacco (@CiovaccoCapital) October 14, 2019
Did the hard data show a big and concerning spike in jobless claims this week?
— Chris Ciovacco (@CiovaccoCapital) October 13, 2019
No, unemployment claims dropped and the four-week moving average showed a very modest uptick (basically flat).#Economy pic.twitter.com/ORnaY1FoFc
Will Stocks Take Off After Trade Deal?
Fundamentals and Technicals:
https://t.co/xw9Q5dvJU1
#Markets $SPX $SPY #Retirement #Investing #Trading https://t.co/p6zj4a2mob
https://www.ccmmarketmodel.com/short-takes/2019/10/11/will-stakes-take-off-after-trade-deal
How was that call? Luck? bwhaaaaa
That's right, "qqq to the moon baby, well real soon",
Guys just study these YouTube's each week.
That's right, "qqq to the moon baby, well real soon",
Guys just study these YouTube's each week.
Yes, true.....why you using Caps, bahahaha
https://www.ccmmarketmodel.com/short-takes/2019/10/1/similar-drops-in-ism-manufacturing-data
?
?
October 1, 2019
SIMILAR DROPS IN ISM MANUFACTURING DATA
RARE AND RAPID DROP IN ISM MANUFACTURING
ISM Manufacturing PMI Index came in well below expectations on October 1, 2019 sparking renewed fear of a recession.
?
Given the ISM Manufacturing Index was strong in August 2018 and plunged rapidly to the October 1, 2019 level, it might be helpful to know how many similar drops from above the blue line to below the black line have occurred since 1982 and how did the stock market perform over the next five years? The answer to the first question is five previous times (see chart below).
?
The answer to the question how did the stock market perform over the next five years is “quite well”. In the first two years, 80% of the cases posted positive returns. All historical cases (1982-2019) posted gains after four and five years.
?
In the present day case, it took 1.08 years for ISM Manufacturing PMI to drop from the peak above the blue line to below the black line. As you can see in the table above, the three most similar “rapid drops in ISM Manufacturing PMI” cases were 1985, 1989, and 1995. The 2008 and 2016 cases required over four years to see a similar drop to what just occurred in a little over a year. If we isolate the similar “rapid plunge” cases, historical performance was more satisfying.
?
The present day case has many unique circumstances and will follow a unique path. This study simply provides some additional historical context. The bearish case for a rapid plunge in manufacturing data is easy to understand and will get plenty of coverage. These studies, based on history, tell us to keep an open mind about all outcomes from wildly bearish to wildly bullish.
EXPANDED COVERAGE IN THIS WEEK’S VIDEO
This week’s CCM video will most likely provide additional context regarding the similar historical periods shown above. CCM’s weekly video is released every Friday evening between 6 pm ET and midnight. Weekly videos can be found via CCM’s Twitter Feed, CCM’s Blog Short Takes, or the Ciovacco Capital Channel.
BUT 2019 IS SIGNIFICANTLY DIFFERENT
You can make that argument about 100% of the historical studies performed about the economy and financial markets. No two periods in human and market history have the exact same combination of fundamentals, technicals, valuations, interest rates, inflation, etc. Today is always different; that is a constant in the markets.
WHAT ABOUT SMALL SAMPLE SIZES?
The limited sample size of the similar cases above is what it is. We cannot control sample sizes. There have only been three 40%-plus declines in the S&P 500 since 1950 (1973-74, 2000-2002, and 2007-2009), which also represents a very small sample size. Are we supposed to totally ignore these major declines because of the small sample size? According to Reuters, the S&P 500 was officially launched on March 4, 1957, meaning any S&P 500 study deals with a very limited historical data set. It is what it is.
When we study rare events, we acknowledge the sample size and try to learn anything that can add value in the present day. The same concepts apply to the studies above. There are countless economic and market studies that are based on small sample sizes. Typically, the small sample size argument is only raised when the results run counter to someone’s personal opinion. When results agree with someone’s personal view, the small sample size is suddenly not a problem. If you believe a study or data set is irrelevant, there is an easy solution - ignore it.
11 Likes
Share
Older PostTrade, Impeachment, And The Conviction Of Buyers And Sellers
BACK TO TOP
FAQ
MARKET MODEL
CCM WEEKLY VIDEOS
CCM TWITTER FEED
TERMS OF USE
PRIVACY POLICY
Important Disclosures: While the CCM Market Model is based on sound economic and investment principles, there is no guarantee any of the objectives will be met in the future. The terms odds and probabilities also speak to uncertain outcomes. Risks are covered in more detail in the CCM Client Agreement and LPOA. The performance information presented in certain charts or tables represent backtested performance from December 31, 2002 to December 31, 2017, using the model to select ETFs and adjust portfolio allocations based on market conditions. Backtested performance is hypothetical (it does not reflect trading in actual accounts) and is provided for informational purposes only to indicate historical performance had the model portfolios been available over the relevant period. Front-end screens were added to the model in May 2017, and subsequently backtested in the second half of 2017. Backtested performance does not represent actual performance and should not be interpreted as an indication of such performance. Backtested performance results have inherent limitations, some of which are described herein. Backtested returns do not represent the performance results of actual trading and are calculated through the retroactive application of the advisor's model portfolio configuration, designed with the benefit of hindsight. Since backtested performance results do not represent actual trading, they may not reflect the impact that material economic and market factors might have had on the decision-making of the advisor, if the advisor was managing the client assets. No representation is being made that the advisor's strategy will or is likely to achieve profits or losses like those shown. In fact, there are frequently significant material differences between backtested performance results and performance results subsequently achieved by following a strategy. In addition, backtested performance does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or adhere to a trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of backtested performance results and all of which can adversely affect actual trading results. The backtested performance results shown reflect the deduction of: (i) an average annual asset management fee of 0.87%; and (ii) estimated transaction fees and other expenses that a client would experience. The results portrayed reflect the reinvestment of dividends, interest and other income, as appropriate. Backtested performance results assume weekly rebalancing at the end of each week. It is important to understand the assumption of weekly rebalancing has an impact on the annual and weekly returns shown. For weekly rebalancing, the weekly return is calculated with the assumption that the portfolio is perfectly in balance at the beginning of each week. In actual portfolios, however, rebalancing occurs at no set time, and such actions are dependent on both market conditions and individual client liquidity inflows and outflows, along with the cost impact of such transactions on the overall portfolio. As with any investment strategy, there is potential for profit as well as the possibility of loss. CCM does not guarantee any minimum level of investment performance or the success of any client account, model portfolio, or investment strategy. All investments involve risk and investment recommendations will not always be profitable. Past performance does not guarantee future results. Backtested results do not guarantee future results. Results are compared to the performance of the S&P 500 Index ETF (SPY) for informational purposes only. The advisor's investment program does not mirror the S&P 500 Index and the volatility of the advisor's investment program may be materially different. The securities or other instruments included in the S&P 500 Index are not necessarily included in the advisor's portfolio and criteria for inclusion in the S&P 500 Index are different than those for investment by the advisor. The performance of the S&P 500 Index ETF was obtained from published sources believed to be reliable, but which are not warranted as to accuracy or completeness. All references to the S&P 500 Index ETF SPY are to the total return form of the ETF, meaning the impact of dividends is included. Unless noted otherwise, the returns of indices presented herein do not reflect fees or transaction costs, nor net dividends, if any. A description of each index follows: The S&P 500 Index, a diversified index that includes the stocks of 500 U.S. listed, large capitalization companies in major industries. Past performance, including hypothetical past performance, is not indicative of future performance. There can be no assurance that the advisor will achieve its objectives. Any performance information, market analysis or data or other information is not warranted by Ciovacco Capital Management, LLC (CCM or Ciovacco Capital) as to completeness or accuracy express or implied, and such information is subject to change without notice. CCM's investment strategies may change from time to time based on market conditions and enhancements to its investment methods and strategy without further notice. This website and the information contained herein are for informational purposes only and do not constitute a complete description of our investment services, funds or strategies. The data in this website have been prepared by CCM and have not been reviewed, compiled or audited by an independent public accountant. The views expressed on this website represent the current, good faith views of the authors at the time of publication. Please be aware that these views are subject to change at any time and without notice of any kind. CCM assumes no duty and does not undertake to update these views or any forward-looking statements, which are subject to numerous assumptions, risks, and uncertainties, which change over time. All material presented herein is believed to be reliable, but we cannot attest to its accuracy. The information contained herein (including historical prices or values) has been obtained from sources that Ciovacco Capital Management (CCM) considers to be reliable; however, CCM makes no representation as to, or accepts any responsibility or liability for, the accuracy or completeness of the information contained herein, or any decision or action taken by you or any third party in reliance upon the data. Some results are derived using historical estimations from available data. Readers are urged to check with tax advisors before making any investment decisions. This memorandum is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. The investments discussed or recommended in this report may be unsuitable for investors depending on their specific investment objectives and financial position. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. All prices and yields contained in this report are subject to change without notice. This information is based on hypothetical assumptions and is intended for illustrative purposes only. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Investments: Not FDIC Insured - No Bank Guarantee - May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and CCM's fees and other expenses. CCM's services are designed to assist clients in achieving discrete financial goals. They are not intended to provide comprehensive tax advice or financial planning with respect to every aspect of a client's financial situation and do not incorporate specific investments that clients hold elsewhere. For more details, see our Form ADV Part 2 and other disclosures. Not an offer, solicitation of an offer, or advice to buy or sell securities in jurisdictions where CCM is not registered.