Know Where the Lines are Drawn

_____________________

Returning to the monthly look of the market, recall how reliable the slope of the 20 period monthly moving average has been, backtested over 20 years. That reference point is still inclining, which is a long-term positive for bulls. Now, we did breach the 20 period monthly over the summer with the crash, by about 100 S&P points, and have since quickly recovered back over it.

The last time that we significantly breached an inclining 20 period monthly without it resulting in an bear market over the next few months was back in 1998 during the Long Term Capital Management failure and the Asian Contagion. I made a video a few weeks back making the comparison technically to that time period in the market.

_____________________