SPY chart outliers...
Currently... five down days in a row... and six down weeks in a row... both being atypical...
The market rarely exceeds four down days in a row. And there have not been six down weeks in a row since... June-July of 2008... that in a less accelerated move, apparently similar to the current one, then taking the SPY from 106 down to 95... only removing the initial mid correction bounce, before the decline resumed in August, taking it from 100 down to 57 in November... finally bottoming at ~49 in March of 2009. The current move is similar... if seen as following a mid correction bounce, but doing a bit more already than just taking the top off of the bounce. But, you might also see the parallel in the December high as the proxy for the early mid correction bounce in March to June of 2008... the more recent bounce providing the parallel to the August 2008 entry to the accelerated decline... Pay attention to the slope of the Bollinger Bands, then and now ?
Also noting that in most of the "big events" on the charts... the big moves tend to be packed into shorter time frames, as in October of 2008, or March of 2020 both taking only two to three weeks to contain the majority of the accelerated portion of the decline...
The last two weeks, coming off the obvious prior excess in the correction higher... have been steeper in the decline than prior moves... so, either we're overdue for a bounce... as the current decline, thus far, has tended to pair one down week with four of "dithering"... before resuming. But currently has two weeks in a row of accelerated declines. The current acceleration might break that prior pattern of "dithering"... and, if it does... the next two to three weeks should prove interesting...
And, if it does reassert some bit of the prior pattern... maybe we get another bounce that lasts a week or even two... But, given the position on the cusp of the acceleration we're apparently already entering now... IF we get a bounce here tomorrow, or move higher into the early to mid part of next week... I might take it as an short term opportunity to reset options positions for higher strikes on puts at lower cost...
But, given prior history and current chart patterns... I'll avoid putting money into buying longer time values, and prefer more units in nearer term options balancing strike price versus probability of return within the next week or two... I think the "dithering" behavior... is about "managing" the decline... to extract tolls in time value... so, not convinced yet that we're going to see the accelerations occurring that predictably without more interrupts that waste $ in options value vs time..
But, an accelerating decline from here is consistent with my charting showing it "rolling over" from here into "lower"... likely not turning "off the bottom of a correction into new all time highs" from here... but more likely continuing into a bear market...
Note it is also unusual for moves made, even during accelerations as we've seen this week, to have the price exceed the limits of the Bollinger Bands, either by a great distance, as occurred at the bottom in 2020, or over a very long period of time... The move this week has taken the price outside the Bollinger Bands... and that's a key point to note... as we have perhaps begun an acceleration this week... that is not completed...
Below are simplified charts of the 2008 event... and the current chart... that I've tried to match in scale, while also aligning the events of decline... Weekly charts first, then and now... Daily charts follow, now and then...
 |
