• 8 hours Facebook Scrubs Over 2 Billion Fake Accounts
  • 14 hours Dow Scrambles To Avoid Fifth Straight Weekly Loss
  • 1 day Is This The World’s First Truly Democratic Stock Exchange?
  • 1 day India’s Wealthiest Set To Hold $23 Trillion By 2028
  • 2 days First Quarter Profits Slip For World's Top Oil Companies
  • 2 days The Yuan May Be China's Biggest Weakness
  • 2 days Hedge Funds Having A Banner Year
  • 2 days Disney Heiress Asks “Is There Such A Thing As Too Much?”
  • 3 days BHP Turns Bullish On EVs
  • 3 days Investors Turn Bullish On America’s Nuclear Decommissioning Business
  • 3 days The $90M Inflatable Rabbit Redefining Modern Art
  • 3 days Huawei’s Fate In The Air
  • 4 days Tesla Slashes Prices Again
  • 4 days The Modern History Of Financial Entropy
  • 4 days Italy’s Central Bank Embraces Sustainable Investing
  • 4 days Trump Lifts Metals Tariffs To Cool Simmering Trade War
  • 5 days Researchers Push To Limit Space Mining
  • 5 days Could China Start Dumping U.S. Treasury Bonds?
  • 5 days Is Winter Coming For HBO?
  • 6 days Rise Of EVs Signals Peak Gasoline
Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

  1. Home
  2. Markets
  3. Other

What Does A Stock Market Bottom Look Like?

History Helps With Flexibility

Since the S&P 500 recently completed a very rare period of V-bottoms, it is easy to visualize and understand the "rapid bottom and push to new highs" case for stocks. Recency bias tells us we may have pushed other historical examples to the side.


Humans Act In Similar Ways

Since it is important we remain flexible and open to all outcomes, the charts below can help us with the "what if stocks do not bottom for weeks or months" scenarios. The charts below can also help us better identify patterns and candlesticks that may appear during a correction and subsequent bottoming process.


1990 - "U Can't Touch This"

In 1990, MC Hammer was near the top of the charts. Stocks were on the lower end of the charts, peaking in July and then making a series of lower lows before finding a bottom.

$SPX S&P 500 Large Cap Index INDX


1994 - "All I Wanna Do"

Sheryl Crow reminded us to stop and smell the roses. The stock market smelled nothing like roses, making a low in early April. Equities did not turn up convincingly until mid-May.

$SPX S&P 500 Large Cap Index INDX


1997 - "Staring At The Sun"

U2's big 1997 hit required respect for your corneas. Stocks also required a "look away" period, dropping significantly between mid-March and mid-April. Several "green days" were mixed in for confusion purposes.

$SPX S&P 500 Large Cap Index INDX


1998 - "Time Of Your Life"

Green Day's 1998 hit would later be used in the final episode of Seinfeld. Stocks told a story about nothing, correcting in an up and down manner for almost three months.

$SPX S&P 500 Large Cap Index INDX


1999 - "Cowboy"

In 1999, a guy from Detroit said he "wanted to be a Cowboy", which seemed a bit odd. Stocks were dealing with an odd fear about computers crashing at midnight on December 31. Many countertrend rallies were fully retraced before a final low was made.

$SPX S&P 500 Large Cap Index INDX


2004 - "Are You Gonna Be My Girl?"

A band named Jet asked an age old question. Stocks were a mess, making three lower lows during an established daily downtrend.

$SPX S&P 500 Large Cap Index INDX


2005 - "Beverly Hills"

Weezer's song about Jed Clampett's stomping ground seemed to fit well with the still inflating housing bubble. Stocks found "a low" in March before making "the low" in April.

$SPX S&P 500 Large Cap Index INDX


2006 - "Crazy"

Gnarls Barkley had many of us sports fans wondering if things were amiss with the spell checkers. "Crazy" fit right in with housing prices. Rather than dropping for five minutes and then going on to make a new high (see 2013-2014), the S&P 500 followed a more traditional "bottoming process" path.

$SPX S&P 500 Large Cap Index INDX


2010 - "Back Against The Wall"

In 2010, Cage The White Elephant could have been singing about the European Central Bank or Greece. The bottoming process looked eerily similar to 2006.

$SPX S&P 500 Large Cap Index INDX


2011 - "On The Floor"

In 2011 a guy named "Pitbull" did a duet with Jennifer Lopez. Pitbull would eventually land in a Dr. Pepper commercial on the beach (he looked about as comfortable as Richard Nixon on the beach). Anyway, I digress. Stocks spent a good part of the year "On The Floor" and did not bottom until October.

$SPX S&P 500 Large Cap Index INDX

 

Back to homepage

Leave a comment

Leave a comment