Monthly chart of the S&P 500 during the Great Depression
Cannot really see the 200 month moving average but the S&P was definitely below its 200 month moving average from the years 1938 to 1945.
Monthly chart of the S&P 500 during the Stagflation Seventies
Monthly chart of the S&P 500 during the 2008 Financial Crisis and now
As you can see, there were only 3 times when the S&P 500 went below the 200 month moving average and the consequences were really ugly. Depression, mass unemployment and etc. We are now just below it again. If we do not bounce real soon (as in 1-2 day’s time) we will be back in recession mode within 6-10 month’s time. And this time, it will be uglier than the 2008 recession because another recession so soon means that all the stimulus money did not do any good at all. There will definitely be much more fear this time round.
On the brighter side, this is the time where the old makes way for the new. The stronger and more adaptable will survive and the weaker ones will fade away.
Daily chart of the Dow
Daily chart of the S&P
Daily chart for NASDAQ
Only Dow remains above the low of the year. From the looks of it, it seems that we are going to break the low either today or tomorrow. This will also mean that the monthly 200 moving average would be broken.
I'm expecting the S&P 500 to go down to around 950 by Oct 2010.
Daily chart of the VIX
Prophet charts for VIX went totally bonkers. So I’m going to use my TOS charts for this. VIX made a large spike up yesterday as expected. We should see more of such large spikes over the next few weeks.
Daily chart for Gold
When there’s fear, gold and VIX spikes. However we are not yet seeing much movement in gold yet. Maybe it’s because it had ran up quite a bit recently. I’ve never had much good experience trading gold so we shall see about this one.
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