This never happened in the bear markets of 1974, 2001 and 2008



Closing of the month of January

The graph below shows the S & P 500 (SPY) closed above the monthly central line of the Bollinger Band (central band) on January 31, 2019. The January printout came after the closing of the S & P 500 below the central line in December, but above the lower Bollinger band.

BB 2019.png

1973-74 Bear market

As shown in the 1973-1974 version of the same chart, note that the S & P 500 could not recover and close above the midline of the Bollinger Band throughout the bear market. Unlike the 2019 case (so far), the S & P 500 (IVV) closed below the Bollinger lower band in November 1973.

short-take-Ciovacco-bb6.png

Sea urchin market

The same can be said for the bear market 2000-02; the S & P 500 has never closed above the midline of the Bollinger Band after being closed below the T4 2000. As noted below, very bad things happened after the T4 2000. Unlike the case of 2019, the S & P 500 closed in February 2001 under the Bollinger Band.

BB 2000.png

Financial crisis bear market

After the stocks peaked in October 2007, the S & P 500 (VOO) closed below the monthly median line of the Bollinger Band in January 2008 and has never been redone over the this level during the painful bear market. Unlike the 2019 case, the S & P 500 closed in June 2008 under the Bollinger lower band.

BB 2007.png

2019 Look Is Rare

It is relatively rare for the S & P 500 to move above the monthly centerline of the Bollinger Band, close below the center line while staying above the lower Bollinger Band, and then print a monthly closure above the central line, as was the case in 2018-2019. .

Dating back to 1950, there were thirteen similar looks on the S & P 500's monthly chart. As shown in the table below, the bias for equities (TIV) over the next two years has been favorable.

short take-bollingerbands-mm-B.png

Case with width surges

The monthly configuration of the Bollinger Band described above is rare. It is interesting to note that two of the Bollinger Band cases, 1954 and 1991, coincided with an extremely rare 10-day surge that was covered on January 21, 2019. So we have three cases that relate to both the configuration of the Bollinger Band and Rare Width: 1954, 1991 and 2019.

The appearance of the monthly chart for the last trading day of January, 1954 is similar to the rare look found at the end of January 2019.

short-take-bb-1991-2B.png

The ten-day push was completed on January 25, 1954, four trading days before the monthly configuration of the Bollinger Band was taken into account. As in 2019, the price was close to a moving average of 200 flat orange days.

short take-bb-1954-B2.png

The 1954 case, which featured both configurations, was followed by very satisfactory gains in the S & P 500 Index.

short take-Ciovacco capital-spx-1991 btC.png

1991 Dual Setup Case

The appearance of the monthly chart for the last trading day of January 1991 is similar to the rare appearance found at the end of January 2019.

short-take-bb-1991-2.png

The ten-day push was completed on February 4, 1991, two trading days after the monthly configuration of the Bollinger Band. As in 2019, the price was close to a moving average of 200 flat orange days.

short-take-bb-1991 B2.png

The 1991 case, which included both configurations, was followed by very satisfying gains from the S & P 500 Index.

short take-Ciovacco capital-spx-1991 btB.png

Dig deeper

This week's stock market video covers many historical cases that provide additional information on the bullish / bearish debate of 2019.

2015: the weakest trends are more likely to fail

The 2015 case of the Bollinger Band reminds us that a major backtrack still remained a possibility in 2019. The monthly configuration of the BB of 2015 was unable to hold above the midline and it was not possible to go back. turned out to be a false head.

taken-short-bb-2015-a.png

Two other reminders come from the 2015 case:

  1. Markets with trend profiles that are still vulnerable are more vulnerable to reversals, rollbacks, and configuration failures.
  2. A close above the 200-day orange moving average is far from being a "clear" signal on the stock market. In 2015, the S & P 500 closed eight trading sessions over 200 days, before dropping 13.30%.

SPXCCV67B.png

Moral of history

Having something concrete and measurable that differentiates 2018-2019 from the three largest bear markets in history (73-74, 00-02, 07-09) is favorable to the bullish / bearish probabilities in February 2019.

However, the cases of 1957 and 2015 remind us of the fakes and lows the lowest are still possible. During these periods, the stay above the monthly median line of the Bollinger Band was short-lived, which means an interim period. concerns would increase in 2019 if the S & P 500 were to print a monthly close below the median line of the Bollinger Band, which is currently 2685.

Disclosure: I am / we are SCHB for a long time. I have written this article myself and it expresses my own opinions. I do not get compensation for that. I do not have any business relationship with a company whose actions are mentioned in this article.


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