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Twin Charts Separated At Birth: Can You Guess Which Is Which? at Trader’s Narrative





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Take a look at these two charts. They are both of the S&P 500 Index (SPX), they both span roughly the exact same time period, from the start of the year to mid April. But only one of them shows the current market. Which one is it?

And what time period is the other one showing?

spx twin charts which is which chart 1

Hey, no cheating!

Take a careful look at both and notice the uncanny similarities. They both top in early January and then trend down until the inflection point in early March. And then there’s a more or less orderly march upwards:

spx twin charts which is which chart 2

Have you made up your mind? Give up?

The bottom one is showing the current market. That was the easy one. What about the other?

The first chart is from 2003, showing the bear market in its last throes. Of course, as you know, from then on, the S&P 500 continued to climb higher and higher. Similar to today’s market, the technical pattern appeared to be a rising wedge. But this only threw off the bears even more as they waited and waited for the eventual pullback that never really came (well, until after 6 years that is ;) ).

Honestly I have no idea what significance this has, if any, for the market right now but I’ve never seen this much synchronicity between two exact time periods. What do you think?

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7 Responses to “Twin Charts Separated At Birth: Can You Guess Which Is Which?”  

  1. 1 Declan Fallon

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    I wonder if the current rally needs to test the 725 ‘neckline’ much like the April drop in 2003 confirmed 850 ‘neckline’ support. It would put a different shape to the recovery but work out in much the same fashion. Bearish wedge supporters may see 750 as sufficient in that regard.

    Declan

  2. 2 blues

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    There is no significance at all… people kept comparing now and 2002-2003 bottom… no way thing is going to play out the same twice the same way. AND especially NO WAY WE GOING TO HAVE ‘V’ shape recovery like 2003… We are either going to work lower from here or sideway for a LOOOONG TIME.

  3. 3 Peter

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    Do not forget the distance from 200 days ma! It is different. I rather guess that SP500 is forming an inverse head-and-shoulders where right shoulder is still missing (check my blog). Next (even intermediate multi months long) bull market can emerge maybe after the completion of this pattern. Additionally most of the bases are too deep (>60-65%) right now. From these kind of bases stocks will fail to break out successfully.

    Otherwise I always enjoy your blog! Especially about sentiment studies.

    Best,
    Peter :)
    (Budapest, Hungary)

  4. 4 Douglas

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    Don’t know if I get extra points for getting 2/2 for the quiz…well, I only know I didn’t cheat as I marked my results.

    Is this 2003 again is one of my big concerns. So I’m looking at the two charts quite a lot. I don’t think it is 2003 again because as Peter said we are much lower vs the 200 D MA and a bottom is not usually this V shaped I think.

    If we look at fundamentals then I think we are a long way from the bottom.

    The real nightmare for bears however would be - is this a 1929/30 bear market rally again (or 1938)? If so the rally has a lot further up to go.

    I don’t think it is the late 1929 rally all over again because that would have been the big fear spike while we had our fear spikes in October and November last year.

  5. 5 Babak

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    Declan, not sure what you mean by ‘neckline’. Are you referring to a H/S pattern somewhere?

    blues, ok, I’ve got you down to zip significance. yes, that’s the thing most don’t get, even if we do have a definitive bottom, that in no way means that the market has to go up, it can just go sideways (even for a very very long time) grinding down both bulls and bears.

    Peter, bingo! yes, this is what I outlined in great detail when we looked at the current market through Weinstein stage analysis. How many bear markets have died with the 200 day moving average sloping downward? Zero.

    Douglas, for getting 2/2 you get 12.5 NDX points (don’t spend them all in one place) ;) No I don’t think this is a repeat of 2003 from here on in but since the start of the year, the similarities are uncanny.

  6. 6 Paul

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    I think the current market will most likely follow the Weinstein stage analysis allowing for time for the massive stimulus and the economy like housing and unemployment to work it out. It clearly also depends on the effectiveness of the stimulus and how the banks and autos will recover. I have read articles that current rally is mostly the result of banks and hedge funds with liquidity provided by the stimulus and it is bad news should it be true.

  7. 7 Declan Fallon

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    For the ‘neckline’ I am looking more at a double bottom - or at least the last reaction high between reaction lows, one of which was the absolute reaction low.

    DJF

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