Is the Market Set for a Replay of 2008?

Posted by Richard Russell & Jeff Cooper

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Brief Excerpt from Richard Russell:

Where, oh where is the stock market going? Today’s site could be a shocker. The pros follow the S&P so lets do like the pros. The chart below is a daily of the widely-followed S&P. First, we see a head-and-shoulders top delineated with three red arrows. Support was broken when the S&P fell below the upper blue support line.

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The next and critical question is: “Will the S&P break below its March low,” which we see as the second (lower) support line. We’ve seen the S&P sink on seven consecutive weeks, which should mean that it is severely oversold. I’m guessing that the March low will hold.

Now –The case for a reversal and a bullish rally. The Dow has fallen on six consecutive weeks. This is highly unusual, and the odds for a seventh weekly decline in the series are slim.

During the past seven weeks my PTI has finally issued a sell signal, but after dropping for 27 points, my PTI is oversold.

Recently we have experienced two 90% panic-type down days (June 1st and 6th) on the NYSE which served to reduce a lot of the overhanging supply.

With three 90% panic-type down days in June, the overhanging supply of stocks has contracted. The decline in the Transports today adds mystery to the picture of the free-falling Dow.

The latest issue of Time magazine flashes on the cover, WHAT RECOVERY? There is an accompanying picture of the dollar falling apart. By the time one of the national magazines puts its opinion on the cover, the move or the trend referred to is usually over.

When what’s happening is not clear, best to stay clear of the stock market. Gold holds stubbornly well above 1500.

Is the Market Set for a Replay of 2008?

Eerily, the crash in 2008 began from the same levels as the S&P is at currently.

Technically, the crash was triggered by a false breakout over a short-term declining trendline which mirrors the May 31 false breakout and ensuing accelerated downside momentum that began on the Solar Eclipse on June 1. False signals are more powerful than true signals.

See the daily chart of S&P from 2008 here and the daily chart S&P from May 2 below.

….view the chart and read more HERE