next couple of months,” the chief market technician at MKM Parnters tells me, but a chart of the major indexes “looks a lot like what we saw in late 2007 and 2008,” she warns.
For those who weren’t there or are intentionally blocking out the memory, markets made their all-time highs in October of 2007 before beginning a 15-month plunge of nearly 60%. It wasn’t a straight shot, however. 2008 was characterized by a stock market trying to shake off increasing dire economic news. It seemingly bottomed with Bear Stearns’ demise, made a near-term peak in May of ‘o8, seemingly found a bid at key support, then collapsed hideously.
So far in 2011 we’ve had a drop in March, a near-term peak in May, and found support on S&P 500 at 1,100 in early October. Sound familiar? From a technical perspective this comparison doesn’t end well. According to Stockton, markets are carving out a “head and shoulders top formation, a long-term bearish set-up.”
See the full “Breakout” segment below:
Related ETFs: SPDR S&P 500 ETF (NYSEARCA: SPY), ProShares UltraShort S&P500 (NYSEARCA: SDS), ProShares UltraPro Short S&P500 (NYSEARCA: SPXU)