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PUBLIC: Compare 2011 to 2018 What do YOU see?

I debated in my mind whether to make this post public or private for subscribers, but decided to share it with the world to perhaps reach some folks who are on the fence whether to decide they want to subscribe or not.  Shameless plug–it is only $199 a year folks.  I get ideas like this running through my mind because I’m a creative sort.  I look for how the past price action of the market rhymes with today’s stock market.  I never expect them to be exact, but when things tend to line up a little bit, I get thinking about it and go do some research.  I love to do research!

If you have access to a charting package, I’d suggest you log in and pull it up.  Perhaps you will see something or discover something about how the market rhymes as well.  For today’s post, I’m concentrating on a WEEKLY chart of the DJIA in the years 2010-2011 and then 2015-2018.  I am going to insert the 2010-11 chart here…and I’m going to warn you…it is BUSY!  I marked up LOTS of things I am seeing on this chart, and I’ll try to orient you with my text below the chart.  I suggest you right click the chart and open it in another window or tab of your browser so you can have it available to see on your screen while you read the text.

See, busy.  Sorry about that.  Let’s start on the left.  The yellow box is a “correction” in the spring and summer of 2010.  We had bottomed from the Financial Crisis in 2009 about 1 year earlier, so Armageddon was on many investors’ minds.  I’m sure there was some panic selling, similar to what we just witnessed a few weeks ago.  If you look at the run upwards going into that yellow box, and the two red candles after the top, the spike low, and a rebound to just under the highs in the 5th candle (green) from the left inside the yellow box…that is what many folks are thinking we doing and heading right now.  If you believe that to be the case, which it very well could be, look for lower prices over the next few months with the market bouncing rather excitedly with every new weekly low made.  Could we be in the yellow box, absolutely.  Keep that in mind.

However, I’d like to share a different thought with you.  Leave the yellow box and travel to the right on the chart.  I have placed 3 yellow arrows below the price candles and a LONG green arrow above the price candles.  Inside of the big white circle, notice a lavender line and a LONG lavender arrow.  This location is where I believe we are today.  I should have placed a little sticky note that says “you are here” but I am not that cocky.  The good news?  If that is correct, we have bottomed in the short term and we have 5 more weeks of upward price action–is Punxsutawney Phil around and can anyone tell me if he saw his shadow?  However, once that stretch is over, we are going to have to consider that the next few months of 2018 will bring if that “we are here” lavender line is correct.  Generalizing, from May 1 2011 through Halloween 2011, the market was a bit of a roller coaster with 2 down legs that took very nearly 20% off the market.  Are YOU ready for THAT ride?  The good news?  We all know that from 2011 until now, the market has gone nothing but up, up, UP.  Me personally?  I’d prefer to sit out the 20% dump and start to nibble at positions when we are down 15+% with some more data in my back pocket to see if I did manage to predict the right place to pin the “you are here” sticker in the right place.  Since the two scenarios pointed out vary immediately and dramatically, it will be pretty easy to figure out if we are still in the yellow box or if we are at the lavender arrow.

There is a second blue line at the Halloween 2011 low.  Note where that is in relation to the yellow arrows and the highs from from the yellow box.  Now, look at the 2017-2018 chart I’ve marked up very similarly to the 2010-11 chart below.  Again, right click and open in another window for best (and more clear) viewing:

I placed the yellow box in a “correction” area from 2015.  The February 2016 low were equivalent to the July 2011 kick off out of the yellow box.  the first two corrections of any significance were noted by the yellow arrows.  The 3rd yellow arrow closer to the top is the final “correction” before the blow off top we just experienced in January 2018 as price just marched upward in February of 2011 before the “shot across the bow” correction of March 2011 and February 2018.  See the long green arrow on the uptrend and the white channel I’ve been drawing for months that we broke above?  I am going to have a private post about that channel soon, so stay tuned.

Short red arrow from the top and similar long wicked bottoming candle marking the bottom is next.  The 4th candle in the 2011 yellow box was a very similar long lower wicked red candle followed by a rebound.  Again, 2011 yellow box vs. lavender line/arrow  show TWO VERY DIFFERENT immediate outcomes.  It won’t take long to determine which place we are located!  If the lavender line is correct, expect new highs in late March, early April, then another shock downwards, a big bounce that can’t make a new high, and a big slide.  How big?  One of my trading mentors that I’ve mentioned in my private blog posts has an indicator calling for a price in 2018 that is BELOW the lows of 2017.  On the DJIA, below 20,000 is very possible.  He calls them a “panic year” and 2018 is one of them.  So far, it sure looks like that could happen!

If you are a subscriber, thank you.  If you scroll down past the comment field (must be logged in and a member to comment), notice there is a check box to get e-mail notifications of blog posts both PUBLIC and PRIVATE.  I’d advise you to check that box so you can find out when I post something, especially if we begin to get more volatility in the market!  If you aren’t yet a subscriber, please consider it as there are many things posted only in private similar to this for education and awareness of the stock markets here in the US.  I always send out the Market Alert Line monthly update to the e-mail on file, so checking the box below is just if you want to know when a blog post is put up since I do not publish on a regular schedule.  Most find it helpful, thought I would point it out for those that haven’t found it–and according to the stats, most of you have NOT.

Let’s find out if we are in the yellow box of 2010 and have a nice year or so to make money to the upside, or if we are at the lavender arrow and Good Friday is going to kill more than Jesus this year.  He arose from the dead in 3 days, it looks like it might take the stock market more like 3 months to rise from the dead.

2 Comments

  1. Michael
    Michael February 18, 2018

    Thanks for your insight Dr J. You’ve definitel got my attention for the near future and look forward to your next posts.

    • Dr. J
      Dr. J February 19, 2018

      Thanks Michael for the kind words. Note my reply to Kevin from 2/9 as a comment reply in the post “An interesting analog”…nailed the 200 day bounce and last Friday was definitely the highest we had seen since the correction. I hope I nail this “little chart pattern” as well, for all of us. Would be quite a profitable summer for my subscribers!

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