Snapback rallyes in the past from thestreet.com

verfasst von nasdaq, 23.07.2002, 00:08

Now that the market, as measured by any index, is making multiyear lows, when should the bleeding stop, and where can some form of recovery take place? Because very few indicators have worked in trying to call the proximity of the low, I had to pull out the big guns and go to the archives to find what has worked best during times of total uncertainty. I found the following information:

The S&P 500 is now 22.5% below its 40-week (200-day) moving average. Since 1963, where my data begins, this index has been more than 15% below this moving average on only five other occasions. (See the table below.) The average decline below the long-term moving average those six times was 22.9%, with the worst case being 29.6% below in 1974. This means the index has roughly 7% risk from current levels.

The average return three months later was 17.7%, with the worst-case gain being 13.8% from the October 1966 low.

A History of Recoveries
The S&P 500 has done well after falling 15% below its 40-week moving average

Week of Low
Low Price
40- Week MA
% Diff
3-Month Return
6-Month Return
1-Year Return
2-Year Return

7/19/02
848
1095
22.56%


9/21/01
966
1229
21.40%
18.53%
19.36%


3/22/01
1081
1384
21.89%
14.42%
-10.65%
6.28%


12/4/87
221
294
24.75%
21.47%
20.89%
24.01%
59.04%

10/4/74
61
87
29.61%
17.57%
38.92%
41.71%
76.68%

5/29/70
69
90
23.60%
20.29%
25.84%
47.74%
62.63%

10/7/66
73
87
15.97%
13.76%
24.76%
34.53%
43.47%



AVERAGE
22.87%
17.67%
19.85%
30.85%
60.46%

Source: Kirlin Securities

Charting the Dips

The SPX is well below its long-term moving average


Source: Baseline

This indicator suggests that the markets are poised to see a significant countertrend rally over the coming three months. If the fall below the 200-day moving average equals the worst case experienced in 1974, the further decline should happen very quickly, maybe even this week.

The last part of this decline seems to be at hand, and the potential for a snapback rally in all stocks (I have focused on the Nasdaq over the past two weeks) appears to be significant.

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gesamter Thread:

• Snapback rallyes in the past from thestreet.com - nasdaq, 23.07.2002, 00:08
  • Re: Leider eine typische Marketingstudie - JLL, 23.07.2002, 00:18
    • gab es 1929 nicht auch rallyes? - nasdaq, 23.07.2002, 00:32
      • Re: Selbstverständlich gab es Rallyes und was für welche.:-) - JLL, 23.07.2002, 00:52
        • Re: RALLYES 1929 ff - ---- ELLI ----, 23.07.2002, 01:32