Sunday, March 25, 2018

Market Analogy to 1962 JFK and 1987 Stock Market Crashes

This next week, week of March 26th, is going to be interesting.

The S&P 500 has hit it's 200 day moving average again. It's possible that it'll bounce and then it's up, up and away. Here's a weekly S&P 500 chart showing last week's steep drop:

Weekly Chart of S&P 500, Week Ending Mar 23, 2018

Global Macro Monitor has zeroed on a market analogy from 1962 when JFK was president. At that time, inflation was rising and JFK had a spat with US steel producers. He threatened them and made them roll back prices. The stock market had roared higher into 1962 as in 2017 and January of 2018, but took a sudden 30% swoon.  Here's the analogy between then and now.

Suddenly the 2018 Market Action is worse in comparison to 1962. There was a 30% quick bear market that was "buyable"

There is a possibility, with computer algorithm trading, High frequency traders, and all of the trend following, that we'll see another 1987 event:

Another Possible Market Analogy to the US Stock Market in 2018; the Crash of 1987

Below is a summary from Global Macro Monitor of the current market action vs the 1962 market and the 1987 Crash. The upshot of these severe and sudden downturns without recession is that they were all a place to buy equities. Beware of re-tests that might shake you out.  

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