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While this bear market has unique hallmarks, there is something rather familiar about it. We’ve already covered many of the uncanny similarities between the last cyclical bull market and today’s market action.
For example, they both bottomed in March and the two charts look like they were separated at birth. The there’s the ensuing flag formation which played out in the same familiar way this year, as it had 6 years ago. And finally, there is the extreme breadth thrusts which are showing an intense, broad based rally pushing the stock market higher.
Maybe I’m seeing a pattern where there isn’t one but these similarities are too numerous and too picture perfect to simply dismiss. If you disagree, by all means let me know where I’m going off the right path.
But that’s not all. Let’s add yet another to the pile. Here is a chart of the 50 day moving average of the daily Nasdaq advance decline statistics:
If you look carefully, you can see that the bear market ended, at least according to this breadth metric, in July 2002. We then had a beautiful ABC pattern. This is Elliott Wave parlance for a three part wave pattern where the first part (A) takes us against the prevailing trend, then we have a corrective wave (B) and then a final move to complete the countertrend move. There is much more to Elliott Wave of course than this simple pattern.
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Getting back to the Nasdaq breadth, we see a very similar pattern end the bear market in late 2008 as it did in 2002. First, there was a very strong up move (A) and then a shallow retracement (B) and then a continuation move (C) in the original direction. Not only is the ABC pattern almost identical, it takes place almost during the same time of the year!
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