Thinking you might want to try a little day trading on your own, eh? After what has been the most “pass the puke bucket” week in nearly 9 years, I came across a really interesting article today. It says in a nut – that historically the market on a monthly basis likes to hug a 21 period moving average. And that when it gets too far away from it – either above or below it – it will always do a mean reversion to it. This is a chart I just built going back the past 15 years or so. The arrows from left to right are marking:
- The October 2007 final top a year or more before the Lehman disaster
- The March 2009 Great Financial Crisis lows
- The February 2016 panic low and “Shanghai Accord” central banks agreement – to engage in direct market rigging
- The extreme highs above the mean for the past two years. It is quite the distance above mean, no?
- And remember this is a MONTHLY chart. Notice often the candles always seem to gravitate back to the mean like a magnet
Bottom line being – if the hypothesis is correct – SPOOS must come down to roughly the 2369.58 area just to be where they “belong”. And NO…it is NOT different this time. Imagine how many weak hands will be flushed out if this were to occur? We have had a 352 point range highs to lows since January 26th alone. Another -300 down will bankrupt a lot of pikers. Ponderous man…Ponderous