The Market: 1987 Analog Tracking "To the Penny"
Discussion
As the great Carter Worth likes to say, the 1987 analog I’ve been tracking since I first wrote about it on August 3 (and followed up here, here, and here) is tracking “to the penny”:
Seasonality lines up
Rates are breaking to new highs precisely on schedule
Breadth is breaking down in almost identical fashion
The MACD line is rolling over
At this point in 87 crash sequence SPX spent about a week trying to hold its 100dma. Yesterday closed at 4402, just above its 4374 100dma. Sticking with the analog, a week spent around this level shouldn’t be a surprise. But I would be.
Given SPX’s extremely full valuation, record levels of VOL selling speculation, a still-deeply inverted UST curve providing room for the long end to rise to at least the Fed Funds level of circa 533, and a very hawkish FED, I believe the 1987 week-long 100dma consolidation will occur today, providing the last reasonable opportunity to get into shorts and puts.