Tuesday, June 21, 2011

If Sam Is Right…

“From April 29, 2011 through June 10, the S&P 500 recorded six straight weekly declines and fell a total of 7.2% in price, spooked, in our opinion, by a potential debt default by Greece and the projected downshifting of global economic growth. Since 1950, the S&P 500 experienced 14 other times in which it declined six weeks in a row. In the seventh week, the “500” gained an average ½ of 1%, and advanced in 11 of 14 observations. Last week’s performance made it 12 of 15 times, as the market rose 0.04%. History now says, but does not guarantee, that in the coming six weeks the S&P 500 will rise slightly more times than it falls, but that the market will end up slipping around 1% from where it concluded its six week selloff.”

Sam Stovall
Chief Investment Strategist, Standard and Poors
“SECTOR WATCH: Does Volatility Offer a Clue to Market Declines?”
June 21, 2011

On Friday, I wrote "Timing The End of the Bull Market", which put a Mega Trend* timeframe on the end of the sideways market and prospective end of the bull market. Now, along comes the above information from that fountain of historical analysis, Sam Stovall.

As the above excerpted quote describes, we now have the historical context from which the current market can be framed. Now, let’s tie what Sam has provided with my Friday posting:

If Sam is right, the timing will be uncanny. A convergence will take place in which the historical will meet the technical at the junction of time and space (price and moving averages - the Mega Trend*). If this unfolds in anything close to this manner, the resolution of the sideways market (consolidation or distribution) will be all the more clear.

*Use search function above left to read more about the Mega Trend.

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