There has been no shortage of recession talk over the last several months, but the bears' conviction has waned somewhat with the recent 13% rally in the S&P 500. Still, the trading pattern of the S&P 500 has been remarkably similar to the last time that we went into a recession in October 2007. Back then, we had a 5 month 20% decline from October 07 through March 08. That was followed by a strong 15% rally which ultimately faded. Everyone knows what happened in late 2008...
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October 07-July 08. Click to Enlarge.
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This time around, we've had another 5 month, 20% decline followed by a 13% rally. Even the internal structure of the 20% decline (in terms of timing of relief rallies) is eerily similar to '07-'08. What happens next?
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| Click to enlarge |
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