This Time It's Different

"This time it's different!" So they say. You hear and read it a lot, but is that really so?
Let's take a look at the past, here are charts with monthly candlesticks for S&P500 and Nasdaq.

One thing is clear, we won't be making new highs this year! But the chance of a snap back rally is getting bigger by the day. The rubberband is streched harder and harder each day, but we haven't seen a really big panic wash out. I'm talking 7-10% down in one day. So far -4.4% (on a closing basis) was the 'best' for Nasdaq, back in October.

Now let's compare this recent top to the previous ones, and for that purpose I'm only going to post the monthly chart of the S&P. You can clearly see the double top we made in the years 2000 - 2007.

That green line represents a 20 month moving average which is rarely broken in bull markets, just a couple of occasions. We are now at the point that we broke that MA on the downside. When we take a look at the past, there is a big chance we will bounce back towards that line. The big question is, when? Probably January, but who's to say? If we get back to that line, sellers will come in again to push us to new lows. Unless it's different this time... :-)

I would also like to post a chart from alphatrends, to show you how ferocious rallies can be in a bear market, so here is the chart from the SPY in 2008. Above a table with the rallies and below are the dips/crashes. This speaks for itself I think. So don't think because we move up 10% or more, that we are out of the woods…

Trade carefully here, sitting on your hands and wait for better times is probably the best strategy, especially for new traders. And from time to time, zoom out to see the bigger picture. It helps so see what might come next.