S&P 500 "Death Candle" Update

As the month of April is now in the books, it's time to once again update the S&P charts to see if the lines remain crossed. Is a 2001 or 2008 stock market crash still imminent or is it time to sound the all clear?

First, some history. It was early August last year when we first noticed the incredible similarity to 2000 and 2007. As this current pattern plays out, we've taken to writing updates at or near the first of every month because we are watching monthly charts for clues. Here are just a few of the posts we've written:

If you've been following along, you'll recall that we identified the final, key predictive indicator to be a bearish crossing of the 6-month and 24-month moving averages for the S&P 500. This bearish crossing preceded the market meltdowns of 2001 and 2008 and we saw this final piece of the puzzle drop into place on March 1. Since then, though, the "stock market" has done nothing but go up, up, up.

So, is that it? Has the danger passed?? Have The Central Planners won???

Not so fast, my friend. As you take a good, long look at the chart below (click to enlarge), you'll notice that the MA lines remain bearishly crossed so...as of today...the danger has definitely NOT passed. However, the recent rally will soon carry significant weight in the calculation of the 6-month MA so time is running short. If the "stock market" is going to collapse based upon all of this death candle history, then the collapse is going to have to start pretty soon. If the market can make it to July 1 without rolling over, the 6-month should bullishly cross back up and through the 24-month and it would appear that the crisis will have been averted.

At the end of the day, the warning remains in place. Now is NOT the time to be complacent. If you own stocks, mutual funds and/or have exposure to the stock market through your 401(k), you MUST remain keenly aware of the risks at present. Market history doesn't always repeat but it very often rhymes. Therefore, so long as the charts continue to bear such a striking resemblance to 2001 and 2008, the risk in participating in the "stock market" remains high.



Wingy's picture

A first?


donnojackshit's picture

Yippidy do dah 2nd

It's been awhile!

Mr. Fix's picture


Just in case sentiment matters:

This Is "Another Sign That Wall Street Doesn’t Believe The Rally" According To BofA

Submitted by Tyler Durden on 05/02/2016 - 11:37

"In April, the Sell Side Indicator — our measure of Wall Street’s bullishness on stocks — fell by 1ppt to 51.9, its lowest level in over a year. This was the indicator’s biggest one-month drop in the past two years, as the S&P 500 rallied 15% from the February lows through mid-April.... While sentiment has improved significantly off of the 2012 bottom, today's sentiment levels are still below where they were at the market lows of March 2009."

gold slut's picture


Reserved for Marchas...

pm_newbie's picture

Nice update

Always quality content here in Turdville. Thanks Turd.

Mickey's picture

the august and Feb rebounds

stopped at same level.

someone else here follows McHugh who said yesterday he is now negative on the market.

Lemming's picture

Death Cross

I have a mere 95 October $57 SPXL Puts. Anyone care to hazard a guess as to which direction I believe the S&P to be headed?

ReachWest's picture


Thanks for the update Turd. The crash is coming at some point as the Ponzi cannot mathematically continue unabated.

Marchas45's picture


Be Heading Back Up Today. Thanks Gold Slut for watching my spot. Keep Stacking

sengfarmer's picture


Almost 24 hours. I'll take 10th just to get the ball rolling. :)

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