The market of 1994 was particularly difiicult.
It soared from the lows and created excellent rallies. Each rally was crushed and the 200 DMA flatlined.
More importantly,
What happened next?
That was a picture of the first 8 months of 1994. The peak on the right was Sept 1 1994.
Let's look at 1995.
The $VIX absolutely collapsed and the Bull market was under way.
OK. That's what I like...when do I get a rally into 1995??????????????
Seems so awkward here but the January surge looks similar to the Jan 1995 or even the October 2011 had a roaring start.November and Dec 2011 did not make lower lows than October. (Hummm..) The move off the December 1994 lows looks higher on the right for 13 months! Bottom line, Compare the basing patterns of the two markets.
Can history repeat?
Well lets add another piece of data. Here is the VIX.
The $VIX absolutely collapsed and the Bull market was under way.
Here is the current market with space pushed out to the right. The vertical scale is a little impaired.
The $VIX has been plummetting for 14 weeks and hasn't been above the BB centre for 10 weeks.
Well, if this doesn't look like the start of a new bull market it is quite a chameleon.
Major events of 1994?
Major League Baseball strike - and in 2011 - NBA strike.
US moves troops to the Persian Gulf - Currently - just put 3 aircraft carriers in Persian gulf and a nuclear sub.
South Africa holds elections and Nelson Mandela becomes president. - current Arab Spring 2011
Bosnian war, Rwandan Massacre - Currently - Afganistan war, Syrian massacre, Lybian massacre
1994 - Forest Gump was a hit movie - 2011. Still is!
Lastly maybe we are just better off when sports team strike...The 2004 NHL strike gave us a banner year in 2005 stocks.
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Good Trading,
Greg Schnell, CMT
About the author:
Greg Schnell, CMT, MFTA is Chief Technical Analyst at Osprey Strategic specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA).
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