Even the magnitude matches based on the respective VIX levels.
Learn to read your charts properly.
You will be rewarded.
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smilingsynic January 25, 2014 at 3:46 pm
Years during which the January close is less than the December close on average are LOSING years (at least since 1950). Strong market years in general have a January close much higher than the Dec close (like last year). THAT to me is the REAL January effect. For the record, In 2000 there were new highs in March.
Also in 2000 there was a large trading range; the collapse did not happen until the end of the year. I remember that year well, since in 1999 I had gotten tired of the all of amateurs bragging about the money they made in CSCO, and NOK, and AMZN, and others and having the nerve to give me advice on trading.
First is a 1987 style drop, not in the same ballpack percent, but a significant drop correcting all the excess so far. It can land at 1500, 1400 or 1300 which does not matter. The key is that the market will rebuild itself by value buying.
Second one is the Y2K style drop where ES going down 5 to 10 percent only. After all, we have a strong monthly trend to lean on. That will provide the backdrop for a prolonged top making not just going into end of this year. Based on monthly bars, a decent double top, rounding top or measured move top will take us into mid to 3rd quarter in 2015.
Since 1950, only 11 highs of the year were made in January. 53 other times the high in Jan was exceeded later in the year.
The 11 years in which January made the high of the year were mostly bear markets: 2008, 2002, 2001, 1994, 1981, 1977, 1973, 1970, 1962, 1960, and 1953.
Basically a key sign of a bear market is a high for the year made in January, and for a bull market, a high made in December.
Finally, the open gap that was not filled yesterday in ES and SPY are now filled as I type this post at 11 am.
What's next?
Scenario 1 - stuck between here ...
Lawrence's Comment
Recap
ES did not flush lower hence produced a bounce weaker than expected and failed to tag the pullback minimal target. News shock selling dropped ES lower again to another ...
Lawrence's Comment
Recap
Multiple gap down early in the week was defended at Y-0. Eventually, breakout of the bull flag and led to a run to target above Y+1. Reverse waterfall effect ...
Lawrence's Comment
Recap
NQ wild swings between previous week close and Y+1. Broke out upside but failed to stay above. That opened the door back down to Y-0. NQ finally catch up ...
Years during which the January close is less than the December close on average are LOSING years (at least since 1950). Strong market years in general have a January close much higher than the Dec close (like last year). THAT to me is the REAL January effect. For the record, In 2000 there were new highs in March.
Should be interesting to research this a bit further.
Also in 2000 there was a large trading range; the collapse did not happen until the end of the year. I remember that year well, since in 1999 I had gotten tired of the all of amateurs bragging about the money they made in CSCO, and NOK, and AMZN, and others and having the nerve to give me advice on trading.
Isn’t that the ultimate sign?
I see two potential scenarios in the making.
First is a 1987 style drop, not in the same ballpack percent, but a significant drop correcting all the excess so far. It can land at 1500, 1400 or 1300 which does not matter. The key is that the market will rebuild itself by value buying.
Second one is the Y2K style drop where ES going down 5 to 10 percent only. After all, we have a strong monthly trend to lean on. That will provide the backdrop for a prolonged top making not just going into end of this year. Based on monthly bars, a decent double top, rounding top or measured move top will take us into mid to 3rd quarter in 2015.
Since 1950, only 11 highs of the year were made in January. 53 other times the high in Jan was exceeded later in the year.
The 11 years in which January made the high of the year were mostly bear markets: 2008, 2002, 2001, 1994, 1981, 1977, 1973, 1970, 1962, 1960, and 1953.
Basically a key sign of a bear market is a high for the year made in January, and for a bull market, a high made in December.