Abstract
Typically, we don’t search for worth analogies. However as Mark Twain stated, “Historical past would not repeats itself, but it surely usually rhymes.” This present speedy decline, with the S&P 500 (SPX) down 10% in simply 16 days and ranging from an all-time excessive (ATH), reminds us of the October 2014 pullback. Again then, the SPX dropped 7.4% from an ATH in 19 days and misplaced 9.8% on an intraday foundation. The 14-day Relative Power Index (RSI) fell to 29.2%, with the decline lasting 4 weeks and holding its 50-week common. The decline additionally occurred after about 1.5 years of weekly momentum divergences. The present decline is on week 4, is happening after a yr of bearish weekly divergences, however is sitting beneath its 50-week. The underside of the 2014 slide was marked by two massive hammer candlesticks on the each day and an enormous weekly hammer. The SPX went on to finish a fast “V” backside and moved to ATHs. To throw some water on our analogy, market breadth is weaker now than in 2014 and, up to now, bearish sentiment had spiked a lot greater again then in keeping with the choices market. The technical situation of the inventory market continues to weaken and we’re lastly getting an SPX 10% correction, with extra ache within the Nasdaq and Nasdaq 100 (QQQ). Ominously,