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Analogs to the current Bear Market

06 April 2020 2:16 PM | (Administrator)

Analyzing price action over the last 125 days (about half a trading year), we found a few examples of trading eerily similar to the current market.  The most highly-correlated with current action was the crash of 1987.  After the steep sell-off in October 1987 (Black October), the market managed a rebound, ultimately to retest its lows in December.  Transposing that on the current market environment, we could see a retest of March's lows in the last week of April.

Our software also detected another analog--September of 1990.  Those of us old enough to remember the very beginning of the Gulf War remember Iraqi SCUDS raining down on Saudi Arabia and Kuwait, with the threat of a third world war a strong possibiity. 

Again, we saw a sharp drop, followed by a rebound, and an ultimate test of the earlier lows.

To be clear, again, we don't trade off of these charts, but we do use them in our "weight of the evidence" approach to market analysis. - The Leader in Quantitative Analytics
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