February 28th, 2008

Narrowing the Window for Next Market Crash

It’s really getting exciting. The “race” is getting down to the finish line and everyone is anxious to see what happens at the end.

What am I talking about? It’s the race I’ve been writing about over the past several weeks, the race to the possibility of a downside breakout from the current trading range (which some have called a symmetrical triangle).

In my February 15 posting, I claimed that the market was 10-20 trading days (excluding holidays and weekends) away from a “crash”. That would place the beginning of the downturn sometime between Monday, March 3 and Monday, March 17.

I arrived at the time frame by extrapolating out the trajectory of the various moving averages by which I measure the direction and strength the market’s momentum. Since those moving averages are fairly long-term in their time-horizon, extrapolating out 10-20 days is relatively easy. Here are several observations recapping the movement towards the “target” (today’s observation is as of 12:00 noon):

Assuming that the S&P 500 remains essentially at the current level of 1365, the crossover between the 180 to below the 300-day moving average with recent rates of descent of the two moving averages should be around March 11.

That date is significant for a number of reasons because it’s the date on which the recently end bull market began in 2003. How do I remember that? Because it’s also my birthday.

Let’s see what, if anything happens this year.

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