Yesterday, we highlighted the 2019 Tactical Playbook, that includes a Reflex rally, then retest of the 12/2018 low, followed by new highs.  The equity market decline since the September peak Still looks like policy-driven market event rather than a credit driven economic crisis. Indeed, the data suggests the 20% drop from peak represents the 4th non-recession crash since 1950.

  • The other 3 occurrences (1987, 1998, 2011) had very consistent post-crash behavior.  Once the market has saw a climactic low, there was a sharp reflex rally followed by a retest of the low within 4-5 weeks, then new highs.  Currently, the SPX is up 8.1% from the intraday low on 12/26, suggesting the reflex rally has largely run its course, and that a retest of the low should take place toward the end of the month.

Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of fees and expenses.

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