S&P 500 ---→ IN FOR A DEEP CORRECTION. MEAN REVERSION PENDING.
S&P 500 IS IN FOR A DEEP CORRECTION.
Monthly SPX Regression Channel, spanning 40 years, with bands of +4/-4 standard deviations.
This is a long-term channel showing a Normal Distribution of SPX price occurrences.
At least 95% of the price occurrences occurred within the Comfort Zone, the blue area between +2/-2 stdev as it should be.
For 14 months (3.54% of the total bars) price has come out above the Comfort Zone, and even beyond +4 stdev.
In an uptrend channel this type of action commands a Mean Reversion most of the time.
Because this channel and its bands are dynamically calculated, the only alternative is for the price to stay out of the Comfort Zone until the channel adapts or accommodates (widens) to engulf the new prices, but in this case everything points to a MEAN REVERSION WITHIN THE NEXT 12 to 24 months.
THEREFORE SPX IS GOING LOWER.
Currently the Comfort Zone is between 3632 / 1818
Bear markets are not cleared up in a few days or weeks. They take time to unwind.
Bear market rallies: Trade'm, but don't Trust'm
We wrote an article about this channel on Feb-21-22
Monthly SPX Regression Channel, spanning 40 years, with bands of +4/-4 standard deviations.
This is a long-term channel showing a Normal Distribution of SPX price occurrences.
At least 95% of the price occurrences occurred within the Comfort Zone, the blue area between +2/-2 stdev as it should be.
For 14 months (3.54% of the total bars) price has come out above the Comfort Zone, and even beyond +4 stdev.
In an uptrend channel this type of action commands a Mean Reversion most of the time.
Because this channel and its bands are dynamically calculated, the only alternative is for the price to stay out of the Comfort Zone until the channel adapts or accommodates (widens) to engulf the new prices, but in this case everything points to a MEAN REVERSION WITHIN THE NEXT 12 to 24 months.
THEREFORE SPX IS GOING LOWER.
Currently the Comfort Zone is between 3632 / 1818
Bear markets are not cleared up in a few days or weeks. They take time to unwind.
Bear market rallies: Trade'm, but don't Trust'm
We wrote an article about this channel on Feb-21-22
Bear Market rallies, Trade'm, but don't Trust'm
Many bull traps will be lurking ahead.