Does the Pullback Have Legs?

Cobra

With stocks starting to show some signs of stability in the last half hour of trading, the big question on the mind of investors is how far the current pullback is likely to extend.

 

In order to address this question, I have updated the (surprisingly popular) table I presented at the beginning of the month in Pullbacks in the 2009 Bull Market. The revised table now shows that the pullback which ran from September 23^rd to October 2^nd resulted in a 5.6% decline from peak to trough, making it the third largest pullback in the S&P 500 index in percentage terms since the beginning of the March rally.

 

A comparable pullback of 5.6% this time around would put the next bottom in the SPX at 1041. Using an average of 5.8% for the previous seven pullbacks would establish a target SPX bottom of 1037. In both scenarios, today’s low represents less than 60% of the expected distance to the target bottom.

 

So while we may not be putting in a near-term bottom today, a good guesstimate is that the SPX has about 25 points more to fall if it is to keep up with recent historical norms.

 

sequoia

NDX just broke down its short-term uptrend today, the bottom should be weeks away with many lower lows and lower highs on hourly chart.

hifive

yaobooyao

A very nice table!

Thanks for the excellent statistics analysis.

trueself

tolerable for me

and thanks!

always

Thanks as always

xnz

thanks

CoolMax

June-July actually is two steps drop, so each one is around 5% too.
Also make sense is the June-July is the Big B. unless we see a higher level wave again, we won't 10% drop in short term.

bayliner1979

I think yesterday's 2.4.2 $NYADV said that there is a lower close ahead in the near future.

lazbug

1# Cobra

almost same as -70 from 1100 = 1030,  (from July, last 3 times pull back is -40, -50, -60),  

but the bear side drop too slow and seems less power

daxiong

Thanks!

bigfish

Ding Cobra! This is a very good analysis. Simple and Straightforward.

wnd4

thanks

man_student

thanks,

ut1984

thx facai

johnwei

thx

weigoodone01

ChuChu888

Bigmouth

想发

Thanks