A Death Candle for the S&P 500

Past performance is not always a reliable indicator of future results. In this case, however, it very well may be. Therefore if you have stock market exposure, either through mutual funds or your 401(k), you definitely want to make note of this long-term chart.

Click to enlarge to chart below and take a good look. When you're finished, keep reading and we'll explain what you see:

Above is a 25-year, monthly chart of the S&P 500. Note that the general trend is positive but it is marked by two, significant bear market corrections.

First, note the rally that began in 1995 near the 450 level on the S&P and extended all the way to a rounded top near 1,500 over an eight-month period in 2000 when the buying momentum was finally exhausted and the market began to roll over. Often, market tops are noted with clear 20/20 hindsight and this was soon to be the case here. Note the big, nasty "Death Candle" on the chart for December of 2000. To make it easier to find, we've marked the chart with a blue arrow.

In December of 2000, the S&P saw a high of 1,389, a low of 1,254 and a final close of 1,320. This meant that, for the month, the range was 9.72% and the final loss was 4.97%. This painted a nasty, red candle on the chart that again, with the benefit of hindsight, clearly marked the trend change and the end of the bull market. By the time the S&P bottomed in October of 2002, the index had fallen to a low of 769. The total drop from the peak of 1,553 in March of 2000 to the low of just 769 in October 2002 was just over 50%.

From those 2002 lows, however, a new bull market rally began. It lasted just over five years and it peaked in November of 2007 at S&P 1,546. Once again, the stock market was forming a 6-8 month rounded top and it began to roll over in early 2008. Now please locate the middle blue arrow on the chart above. Note that it is pointing at the month of January 2008 and the big, nasty "Death Candle" found there.

In January of 2008, the S&P saw a high of 1,472, a low of 1,270 and a final close of 1,378. This meant that, for the month, the range was 13.72% and the final loss was 6.38%. Just as in December of 2000, this "Death Candle" marked the end of the bull market and beginning of a steep, painful correction. From a high of 1,546 in November of 2007, the S&P fell to a low of 667 in March of 2009. That's a total drop of 56.86%. Yikes!

Which brings us to present day and the third blue arrow on the chart that is pointing to the just-completed month of August 2015. Once again, the S&P appears to have completed a 6-8 month rounded top, failing on multiple occasions to breach stout resistance near 2100. And now look at what has been painted onto the chart...another Death Candle.

For the month of August 2015, the S&P saw a high of 2,113, a low of 1,867 and a close of 1,972. This meant that, for the month, the range was 11.64% and the final loss was 6.67%. Just as in December of 2000 and January of 2008, we will almost certainly be able to look back in hindsight and see that August of 2015 marked the end of the most recent bull market. Should history repeat...and we see no reason why it shouldn't...over the next 12-18 months, the S&P will now fall about 50% from it's most recent peak of 2,135 in May of this year. This would bring the index back down to 1,000-1,100 range by sometime in late 2016.

Therefore, the time to act is now. You can either continue to drink the hopium of Bloomberg and CNBC or you can respect "The Death Candle" and take action to avoid losses similar to 2000 and 2008.

TF

82 Comments

matt_'s picture

And the HUI is down today

While gold is up. Unbelievable. sad

legacyelectric's picture

2nd

2nd now to read

tyberious's picture

3rd

Turd

tyberious's picture

Turky Ferguson

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tyberious's picture

Hyperinflation CAN’T BE

Hyperinflation CAN’T BE PREVENTED by Debt/Deflation — Jeff Nielson

This is not a chart of a potential hyperinflation. Rather, it is a chart of a currency which has already been hyperinflated.

by Jeff Nielson, Sprott Money:

A repetitive flaw continues to circulate throughout much of the media – mainstream and Alternative, alike. This flawed analysis contends that we are heading for a deflationary crash, and reflects a fundamental misunderstanding of economic dynamics.

This fundamental (and unforgivable) error comes from a failure to recognize the definition of deflation: it is when the currency in which a particular jurisdiction is denominated rises in value. It is with this basic fact in mind that we can now view a simple hypothetical example, which resolves the phony “inflation/deflation debate” once-and-for-all.

Read More…

James Crighton's picture

One Glorious Vomiting Camel

in that (classic) chart (of the S&P), there is a finger down the camels throat and it is about to puke - one ..... glorious .... chunder ....

jc

lakedweller2's picture

Rule 48 opening

I think that means they were overwhelmed with sale orders and altered the market opening prices and/ or activity

tyberious's picture

Nothing Really New

CPE's picture

When you see this:

When you see this:

death-candle-live-wallpaper-517927-1-s-3

It's time to buy this:

jqb_krugerrand_1ounce_pile.jpg

Any questions?

mike97's picture

Turd - reverse algo's not working

Japanese yen up over 1% again but gold just flat and when oil when screaming up over the past week silver was just flat to down. Turd your algos only seem to work on the way down but the PPT/Cartel just caps on the way up.

Dr. P. Metals's picture

JDog to the rescue

Now you know who to call when you need your garbage junk metals, er pet rocks, hauled to the dump!

http://video.foxnews.com/v/4456647813001

I like the name :) maybe they Should fly over to Poland for some train cleanup work? But wouldn't ya know it, It's the DARNDEST thing: that German gold train supposedly went up in flames yesterday (not kidding)! Rofl. 

And we thought "twilight zone" episodes were "weird". Lolz. Nothing compared to today's "reality" (and SS's all charts are fake stuff)!

Sorry SS, couldn't resist the temptation to squeeze that in on the end :)

Homes's picture

Glad you made it public

This is an effective article to forward on to my coworkers who are still convinced this is only a correction. 

canary's picture

@mike97...yes

The "fundamentals" work for gold/silver on their way down...always.

Turd Ferguson's picture

Glad to do it

MODERATOR

If you save them thousands, they'll be buying your Happy Hour cocktails for life!

brokerk22's picture

Gold

is just sitting there waiting for these morons to figure it out.  I cant believe what a bunch stupid conditioned idiots that are invested in these markets.

Dr. P. Metals's picture

No Worries

CNBS: "Major Indexes Off Lows".

Whew!

Dr Jerome's picture

Whew!

Thanks Dr P

"Major Indexes Off Lows"

Isn't that just like the mainstream news? That statement is true enough, when taken out of context. Turd's article above provides the needed context.

tyberious's picture

Dave nails it again

Blame It On China…

"Nothing is ever the fault of the “exceptional” United States.  It’s not our fault that we have to spend trillions containing the evil terrorists in the Middle East while we steal their oil and occupy their countries.

And of course it’s China’s fault that the U.S. stock market is all of a sudden finding the gravitational pull of economic, financial and political fundamentals."

http://investmentresearchdynamics.com/blame-it-on-china/

lakedweller2's picture

@mike97

We see something similar in oil stocks.  With the 7% short squeeze yesterday, oil stocks hardly moved.  With a similar move down today, they are trashed.  Both the miner situation and the oil stocks evidently have been cleared by the Federal Government to be treated as objects of theft by insiders. 

LostMind's picture

At what point did the Greeks stop paying taxes

This brings up an interesting point, especially if you read some of the articles linked above.

At what point does our own gubmint decide they do not want US$ for payment of taxes?

Example: You do not pay your 2015 taxes until April 15, 2016. Or pick whatever year suits you.

You owe $100K in takes for that year. The US$ plummets in value and you can know pay your taxes with the equivalent of say $15K of previous value.

We are all talking about the debt we may have or need to pay or if it would be "jubilee'd", but do you think Uncle Sam is going to agree to that without serious taxes owed in some new form of payment?

I think this is the most interesting and thought provoking question for anyone who is concerned about the next turn. The Greeks didn't have the IRS to come after them.  

Also, I see the gubmint demanding one form of "repayment" while issuing a new or maintaining the old form of payment for entitlements.  You can argue this, but the reality is we have a gubmint that believes it really can do whatever it wants. Especially when doing the bid and call of the banks...

And by the way. WE do not have DEBTOR prisons anymore. But you do go to jail for not paying your taxes, which is considered a DUTY! Thus, your lack of payment on your duty will lead you to going to a DEBTORS prison!

goldcom's picture

Capping Metals

This is just part of their scheme to leave the obvious Keynesian avenue for investors to either get fleeced or buy bonds. They just can't allow the metals to look to safe havenish. Is that a word? Oh well you know what I mean, and as Turd says what a complete sham!! 

Dr Jerome's picture

A question for the experts ...

I've been daytrading with some success NUGT & JDST to fatten my retirement account. Recent action suggests that I just sit on the side for about 6 months. but then again, shouldn't metals explode higher as stocks crash? Usually, following an initial dip, they do.

But this time the cartel seems hell-bent on keeping metals and miners capped, no matter what happens with the S&P. Loading up on NUGT or JNUG looks more and more like a fool's errand due to their time decay factor.

Sprott's SGDM fund seems more stable, but even it has been battered in the past months, only showing a bit of life recently. Perhaps I could trade a reverse S&P ETF until we see that 1000-1200 range, but I don't want anything leveraged with a time decay component due to options components.  Maybe BTFB will become the new investment mantra (Buy the F-ing bounce).

The sidelines seems like the place to be for quite a while. What say Ye?

Other daily finances getting to tight to stack much these days--college tuition bills...  My son is graduating in 4 months, hallelujah! Daughter has two years to go. Even with a faculty discount for dependents, these college bills are debilitating. I really feel for some of you trying to educate your kids without that fringe benefit. And after all this, the degree may not provide the job they seek.

lakedweller2's picture

@LostMind

The Greek system is so corrupt that not paying taxes is a confrontation with your local tax man who may have his own rules for taxes which pisses off the local population generating group protest and disgust.

In the US, the system is organized and the unfairness is universal, back by Congress and Federal and local law enforcement.

Joseph Warren's picture

Is Trump Just a Stage Prop ? . . .

Check out the Sept 1 posted article by Jon Rappoport on Trump and the whole election process. IMO one of the best articles on elections as circus and diversion to come out in awhile -

https://jonrappoport.wordpress.com/category/elections/

ArtL's picture

FF (First Mining Finance) halted

http://finance.yahoo.com/news/iiroc-trading-halt-pkl-ff-125000354.html;_ylt=AwrXoCE5zOVVAHkAuWDQtDMD;_ylu=X3oDMTByb2lvbXVuBGNvbG8DZ3ExBHBvcwMxBHZ0aWQDBHNlYwNzcg--

Company: First Mining Finance Corp.

TSX-Venture Symbol:  FF

Reason: At the Request of the Company Pending News

Halt Time (ET): 8:39 AM

IIROC can make a decision to impose a temporary suspension (halt) of trading in a security of a publicly-listed company. Trading halts are implemented to ensure a fair and orderly market. IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada .

SOURCE Investment Industry Regulatory Organization of Canada (IIROC) - Halts/Resumptions

View photo

.

Contact:

IIROC Inquiries 1-877-442-4322 (Option 2) - Please note that IIROC is not able to provide any additional information regarding a specific trading halt. Information is limited to general enquiries only.

Dr Jerome's picture

Paying taxes with inflated dollars?

@ LostMind

You raise a very interesting tax question. If this year is seeing a dollar collapse (hyperinflation) wouldn't it be wise to withhold as little as possible, file an extension on your 2015 return delaying the amount owed until Oct of 2016. Perhaps the dollar will be done collapsing by then. But one would have to put those saved dollars into something that will hold value in the meantime. And if gold is capped and managed as currently, what is one to do with those dying dollars while waiting to pay the tax liability? Gold & silver may not break free before a tax bill is due.

There has to be some revaluation coming. ts not just hte IRS that will be in a bind, but every lender in the country getting paid back in inflated dollars. That has always been my hope -- to pay of my mortgage with just a few ounces of gold after a reset.

silver66's picture

Dr J

I hear you, do not underestimate the power of banks over politicians to reto actively change the rules

I have implemented the same strategy in my house by the way

See the 1790's and the Assignat in France

Silver66

Gramp's picture

Picked up a few rounds from the new sponsor

The Money Metals Exchange sponsor is offering a 1 time deal for new customers of 4 ounces of silver for about $10 less than retail.
I thought that was a pretty good offer and took them up on it! It all adds up!

Dyna mo hum's picture

HAIR BALL..

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