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ALERT: The warning signal preceding global stock market crashes
in 1929, 2000 & 2008 was just triggered!
January
13 (King
World News)
– Jason
Goepfert at SentimenTrader: Stocks
have now suffered two 10% corrections in a short span. This is
difficult to quantify, but according to our tests, this
has only happened on three other unique dates, in 1929, 2000 and
2008. All of those preceded major bear markets.
On
a shorter-term basis, a near-majority of our indicators are now
oversold or showing extreme pessimism. We’re seeing the most
heavily lopsided selling volume in five years according to the Up
Volume Ratio.
Markets
not responding to oversold conditions…The S&P 500 has now
corrected 10% from near a 52-week high for the second time in a
relatively short span. In the meantime, it had rallied at least 10%.
Action
Mirrors 1929, 2000 & 2008 Stock Market Crashes!
Going
back to 1928, this has only happened on four other dates, October
1929, May 23, 2000, October 11, 2000 and January 8, 2008. As
shown in Figure 3, these were dates that should send a shiver down
the spine of any bull (see stunning chart below).
Is
this significant? We can’t read much into three unique occurrences,
but they were consistent and the pattern is similar.
Shorter-term,
the selling on Wednesday was overwhelming, with more than 90% volume
flowing into declining stocks. Over the past 10 days, the Up Volume
Ratio has dropped below 28% for the first time in five years.
Bottom
line, this is one of the more difficult junctures in the 18 years
we’ve been publishing. Stocks are objectively oversold but markets
are not responding well to that. There are lingering long-term
concerns but also many positives when looking at other oversold
markets.
3
Possible Scenarios
This is a throw-your-hands up moment. There are basically three scenarios and we’d give the probabilities like this:
*
Oversold bounce:50%
*
Flush lower then bounce:30%
*
Outright collapse of 5%-15%: 20%
Well this confirms my RSI observation. Thanks.
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