2009-2014 $SPX ON SAME SLOPE AS 1995-2000 -- 2003 -2007 $SPX SLOPE HAS BEEN SEEN BEFORE -- THE $SPX IS ON ONE OF THE LONGEST STREAKS SINCE 1984 -- MID DECADE RALLIES HAVE BEEN A THEME -- $WTIC GIVES UP 3 WEEKS OF GAINS
2009-2014 $SPX ON SAME SLOPE AS 1995-2000 ... Year-end is always a good place to review the big picture. The current slope of the $SPX advance is the same as in the 5 year run from 1995-2000. As long as we stay above the multi year trend line in Chart 1, we can obviously expect our bull market to continue. The rally from 2003 to 2007 had a very simple trend line break as well, right near the highs. Waiting for the major trend line break would have got you out very close to the top in both 2000 and 2007.
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Chart 1
2003 -2007 $SPX SLOPE HAS BEEN SEEN BEFORE ... One interesting fact about the 1999 2000 final market top was that the monthly closes over the final year created a different trend line marked in blue on Chart 2. This 2000 top trend line is on the same slope as the main trend line of 2003-2007. We currently do not have any trend lines near the final slopes of the last 2 bull markets. W.D. Gann widely discussed the change of slope during the final stages of a market run.
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Chart 2
THE $SPX IS ON ONE OF THE LONGEST STREAKS SINCE 1984.... In what was a blockbuster streak from 1982 to 1984, the $SPX went over 2 years without touching the 200 DMA in a big bull market rally. Chart 3 shows of the length of all the major rallies between the 200 DMA touches since the 1982 bull run started. We are currently in the longest rally since 1996 or 18 years. This is a top 4 rally of the last 30 years.
Chart 3
MID DECADE RALLIES HAVE BEEN A THEME ... You can see that the 1980's rallies detailed above were all within the 1982 -1987 rally based on the total number of weeks. The period of 1993-1997 was also pretty much straight up. 2003 to 2007 was also a very bullish period. Is the current magic of 2012 2014 going to carry us up through to 2017? Chart 4 shows this to be a bullish precedent. Chart 4 shows the mid decade rallies.
1982 - 1987, 1993 - 1997, 2003 2007, 2012 2017?
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Chart 4
$WTIC GIVES UP 3 WEEKS OF GAINS... $WTIC was not quite able to hold the highest close for the year-end through to Dec 31st. On the final day of trading, $WTIC closed at 98.70 or $0.50 less than the highest annual close ever. We have been monitoring crude very closely as multiple patterns are converging here. Chart 5 shows $WTIC is trying to hold above a flat 40 WMA in green. Price action at the 40 WMA can be a critical indicator. Horizontal support was at $98. Crude dropped well below that to trade in the mid $95 dollar range. Both the 10 WMA and 40 WMA could not provide a foundation for the price bottom. The sudden move down losing almost 3% in a day and losing all the near term support levels combine to paint a very bearish chart. The failure to get through $100 resistance is a meaningful piece of information. The rollover on the MACD short of the signal line and a MACD with negative slope below zero adds more information. The chart has changed quickly this week with negative developments which puts the long trade in crude into question.
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Chart 5
THE CURRENT NASDAQ PROFILE LOOKS PARABOLIC ... By connecting the lows on the $COMPQ in Chart 6, you can see the sweeping move up. You can also see that in 2 years, the $COMPQ has not had a red Elder candle which would indicate a market pullback. The distance to the 4300 level is just over 2%. Back in 2000, the 4300 level marked the shoulders on the final blow off top. The first time the NASDAQ went to 4300 was on the open of January 3, 2000. While we do not have the volatility associated with the 2000 top, it would be fair to say the $COMPQ market looks stretched here. Interestingly, in 2000, even though all the Y2K software worked out fine over the millennium change, the NASDAQ stock market fell over 11% in 4 days starting the first few days of January 2000. The bulls were still in control and after some oscillations below 4300, they took the market up 20% through February into March 2000 in 6 weeks. We do not have anywhere near the same pace of frenetic buying and extreme volatility. However, a case can be made that a sharp correction of 10% would not shock a technician at this point with a parabolic index chart.
