Monthly BB history: 2000, 2008, and 2016?

  • Posted by
  • on January 11th, 2016

The data set is small — but it’s an interesting pattern.   In the last 20 years $SPY has hit the lower monthly BB in 2000, 2008, and today January 11, 2016, tagged it at 190 to bounce into the close.

From 1995-2000: hit lower monthly BB in December 2000.

Click to enlargen.

Chart_16-01-11_09-29-46

Started a vicious 2 year bear market.

Chart_16-01-11_09-30-38

Things were good from 2002 bottom until 2008 financial crisis.  Hit lower monthly BB in January 2008

Chart_16-01-11_09-31-49

Janary 2008 down-turn lasted until March 2009.

Chart_16-01-11_09-32-19

March 2009- January 2016  Amazing run — but hit it again today, again, 8 years later.

 

Chart_16-01-11_09-33-04

 

 

It took 8 years to touch it again from 2000 to 2008, and 8 years again this time on the 2016 touch today.  2000, 2008, 2016.  Lots of caveats of course: it’s a very small data set, and the world is a different place than it was back then (lower valuations, years of QE, lower interest rates).

The only way these charts are “actionable” to us is that they are worrisome enough that we are not attempting to take longer term positions buying the dip.   We’ll jump on after reversal candles with stops on low but we won’t be bidding lows, entering partials, and adding at lower levels.   If it is the start of the third bear market of our career we do not want to be entertaining ideas of trying to catch bottoms this early in the cycle.  And if it’s not the start of another bear market, then there will be ample opportunity to get on the long side after charts have somewhat stabilized.   For now, happy to stick to short-term trading in both directions with no big bets.   They say in trading “no balls, no babies” but we prefer the saying “There are old traders around and there are bold traders around, but there are no old, bold traders around”.

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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