One more chart to finish up on my weekend research...and I promise this is the last one, cross my heart and hope to die.
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1582174>
This, for those who have never looked at one, is called a "point and figure" chart. They are only used by old farts.
The idea of a P&F chart is that it shows pure price movement independent of time. This particular one is of the S&P cash index, and it's a "10x10" chart. That means that each of the green X's and red O's represent a 10-point move in the spooz, and each vertical column of X's or O's represents at least a 100-point move.
Note the double top, just like what we saw on the ordinary monthly chart.
Also note the price pattern in the 2000 timeframe preceding the last bear market. Notice all the 100-plus-point re-tests of the high before the bear market got underway in earnest.
I suspect that we can expect the same thing if a new bear market is in the offing. In other words, even if we wind up dropping a couple of hundred points, there will almost certainly be several re-tests of the highs before the bottom drops out. So if you get caught short with a lot of money in equities, don't panic -- the market will probably give you another chance to get out with your hide intact. But if you don't take your second chance, there might not be a third (at least for a decade or so).
All in all, it's been an interesting weekend.
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1582174>
This, for those who have never looked at one, is called a "point and figure" chart. They are only used by old farts.
The idea of a P&F chart is that it shows pure price movement independent of time. This particular one is of the S&P cash index, and it's a "10x10" chart. That means that each of the green X's and red O's represent a 10-point move in the spooz, and each vertical column of X's or O's represents at least a 100-point move.Note the double top, just like what we saw on the ordinary monthly chart.
Also note the price pattern in the 2000 timeframe preceding the last bear market. Notice all the 100-plus-point re-tests of the high before the bear market got underway in earnest.
I suspect that we can expect the same thing if a new bear market is in the offing. In other words, even if we wind up dropping a couple of hundred points, there will almost certainly be several re-tests of the highs before the bottom drops out. So if you get caught short with a lot of money in equities, don't panic -- the market will probably give you another chance to get out with your hide intact. But if you don't take your second chance, there might not be a third (at least for a decade or so).
All in all, it's been an interesting weekend.
