«Here’s what History says.»

Traders,

Let’s explore what history says about how much further stocks have to fall. Today’s chart looks at what the S&P 500 did after falling 20% from its highs (the start of a Bear Market). It’s an event that’s happened ten times since 1950.

The results are all over the board:

• 2008 was the worst episode seeing stocks fall another 45.6%. Gross.
• 1957 and 1987 essentially saw stocks bottoming without losing even 1% more.
• The median additional loss was -9% which makes sense because the typical bear market sees stocks fall around 30%.

Which flight path will we see this go around? Given the health of consumer and corporate balance sheets, I’d be shocked to see anything close to 2008. More likely, we see one of the more benign follow-throughs.

Today’s Chart of the Day is an excellent example of using history as a guide. It provides context and color to what’s happening right now.

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Video of the Day: What are and how to identify Bearish Down Trends

You trade the pattern until it changes! In this video, Coach Matt discusses bearish downtrends and their patterns in depth by explaining candlesticks, resistance, and support.

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Chart of the Day: How Low Can We Go?

If this is the median bear market then we fall another 9% over the next two-and-a-half months.

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Today’s line up

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Cashflow Club 8:30 PM EST

Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.

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