Saturday, April 04, 2020 5:46:46 PM
Monthly SPX chart study on major trend line breaks and the bear market rally.
Will also be looking at unemployment at the same time.
https://www.thebalance.com/unemployment-rate-by-year-3305506
1929 Depression Total loss of 84%
Unemployment peaked at 24.9% in 1933
1968 total loss of 37% unemployment in 1970 went to 6.1%
1973 total loss of 49% unemployment in 1975 was at 8.2%
In 1973 once the trend line got closed below there was a bear market bounce of 13% back up just above the trend line and then plunged 40%
2000 total loss of 50% unemployment in 2002 went to 6%
2008 total loss of 57% unemployment in 2009 went to 9.9%
2020 To be determined. History does show that a month or two we have double bottoms, sometimes a bit lower and sometimes not.
Then it shows that is when we have the bear market rally of 15-23% that comes close to a retest of the trend line and then the big hurt comes.
If the market rolls over in April down to 2100. It is still within possibility for the market to have a 22% rally back up to the trend line in May or June when we are finally able to go back outside.
The scary part is what happens next. After the bear market rally up to the trend line, in an "average recession" we still saw 40-50% plunges from the trend line on the next major leg down.
And if this is "depression grade" we could see more.
Right now it looks more and more like we are going to surpass the numbers of unemployment from 2008 and I believe that in time we are going to be seeing that we are in worse shape than in 2008 and we are facing times closer to the 1929 situation.
No one knows how things will turn out, but we need to compare apples to apples. If the numbers start coming in worse than 2008 be advised we are facing something bigger than 2008.
But we did go down further on the first fall below the trend line than the other times, so the next leg down may not be as far to fall.
Will also be looking at unemployment at the same time.
https://www.thebalance.com/unemployment-rate-by-year-3305506
1929 Depression Total loss of 84%
Unemployment peaked at 24.9% in 1933
1968 total loss of 37% unemployment in 1970 went to 6.1%
1973 total loss of 49% unemployment in 1975 was at 8.2%
In 1973 once the trend line got closed below there was a bear market bounce of 13% back up just above the trend line and then plunged 40%
2000 total loss of 50% unemployment in 2002 went to 6%
2008 total loss of 57% unemployment in 2009 went to 9.9%
2020 To be determined. History does show that a month or two we have double bottoms, sometimes a bit lower and sometimes not.
Then it shows that is when we have the bear market rally of 15-23% that comes close to a retest of the trend line and then the big hurt comes.
If the market rolls over in April down to 2100. It is still within possibility for the market to have a 22% rally back up to the trend line in May or June when we are finally able to go back outside.
The scary part is what happens next. After the bear market rally up to the trend line, in an "average recession" we still saw 40-50% plunges from the trend line on the next major leg down.
And if this is "depression grade" we could see more.
Right now it looks more and more like we are going to surpass the numbers of unemployment from 2008 and I believe that in time we are going to be seeing that we are in worse shape than in 2008 and we are facing times closer to the 1929 situation.
No one knows how things will turn out, but we need to compare apples to apples. If the numbers start coming in worse than 2008 be advised we are facing something bigger than 2008.
But we did go down further on the first fall below the trend line than the other times, so the next leg down may not be as far to fall.
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