Navigating Major Selloffs: 3 Metrics to Watch
Corrections or bear markets also have patterns, and the current one is following the script from previous occurrences. Profits are possible when charts are studied
For the last month, the weekly chart has consistently painted a bearish picture. As discussed in prior publications, the monthly setup and macro indicators both pointed towards an imminent reversal, which is currently materializing.
If you didn’t secure gains from long positions when the central level was breached on February 21st, or after reviewing the February 22nd publication, this report offers explicit references to patterns prevalent in past bear markets.
Rather than waiting for a definitive 20% drop in the SPX to declare a bear market, I choose to analyze price action and present clear parameters and metrics that have repeatedly appeared during significant selloffs, such as the bounce attempt witnessed today.
Last Wednesday, a study on bear market targets was published, examining major declines like 1987, 2000, 2020, and 2022, all of which exhibited identical metrics. The 2008 crisis, as previously discussed, presented an exception depending on the perspective. Get access through this link.
With bearish signals provided and the anticipated continuation unfolding, the sustained price action below central levels for SPX, NDX, and most analyzed securities validates a disciplined approach.
Today, we analyze the 2018 bear market, or the Tariff War 1.0, which also conforms to the pattern observed in other major declines. This edition further illustrates the NDX analysis, introduces a key volatility reference to validate the presented thesis, and delve into the three Fibonacci metrics that are a must watch at the current stage of the decline based on previous major corrections.
Let’s begin.
Last week we studied the most probable target for a bear market based on price action and indicators, since the selloff continued as expected, there is a second level to watch where a bounce is very likely:
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