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Trend table status

Trend

SP-500

R2000

COMPX

Primary

Up 7/31/20

?- 3/31/20

Up 5/29/20

Intermediate

Up 8/14/20

Up 8/21/20

?+ 9/18/20

Sub-Intermediate

?- 9/15/20

Dn 9/11/20

Dn 9/21/20

Short term

? 9/4/20

? 8/18/20

? 9/4/20


Don Worden of Worden Brothers (makers of Telechart software) used to keep a trend table before his health issues got in the way. I always found it useful. Mine is slightly different. Hopefully helpful. Up? or Dn? means loss of momentum. ? by itself means trend is neutral. ?+ or ?- means trend is neutral with bias of up(+) or down (-)

Monday, January 7, 2013

Rare yearly price action for 2012

I thought this was interesting from Bespoke.  In 2012, SPX never traded negative on the year.  This has happened only eight other times.  Check out this table of the other occurrences and what happened next.

Source

That last time that happened was in 1979.  I find it interesting that in the biggest secular bull market in history from 1982-2000 that it never happened.  Only one time in the previous 8 instances was the market down the next year.  Statistically we have an 87.5% chance of 2013 being up.  Will 2013 be up or will it buck the odds?  Whether or not the year ends up or down it seems more important to me to know how it might unfold.  My SPX data only goes back to the 60s so lets start there.  Here is a chart covering the 64 and 67 occurrences.



The vertical lines mark the end of the years.  The red trend lines mark the depth of the first correction of the following year.  In 65, SPX retraced back into the June of 64 price range.  In 68, SPX retraced all the way back into the Feb. price range.

This next chart covers the 75, 76, and 79 events.



Since 76 was the only back to back occurrence of always being positive YTD there obviously was no serious correction that year.  The red lines mark the lows of the corrections in 77 and 80.  The move down that started in Jan. of 77 ended up retracing the entire move up from 1976.  The correction in 1980 retraced most of the move up from 79.   However, unlike 77, the market mounted a furious rally after the pullback ended.

I looked at the DOW from 44, 52 and 59 which showed no significant corrections in those years.  If we combine that with 76, we see that of the previous eight occurrences, four had no serious correction the next year and four did.  In 77 and 80, price retraced nearly all of the gain from the year before.  It is possible the odds of a correction are higher then 50% now.  Of the last five occurrences only one did not have the correction.  This brings me around to the margin debt problem (see Margin debt).  If we have a pullback that takes out the Nov. low there is the risk of a margin unwind crash.

One other point I want to make.  Even though SPX was up 13.4% for the year, the picture is different in terms of the bull market.  SPX hit 1370 in May of 2011.  It ended 2012 at 1426, only 4% above that 2011 high set 19 months earlier.  The 12 month return looks a lot better then the 19 month return now doesn't it.  It looks even worse when you realize that 1.9% of that 4% gain happened on Dec. 31, LOL.  Since I am on record saying we are making a major top I obviously favor the serious correction and margin unwind event in 2013.

Bob

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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.