Shades of 2000 and 2007

This is the beginning of the end of the 10 year bull market.  I made a tactical error treating this like just an ordinary correction in a bull market, expecting buyers to be there when the market got panicky, but clearly without the stock buybacks (blackout will be lifted for most companies starting next week), there is no support for this market.  All the leading indicators showing a slowing economy in 2019, with the Fed still unwilling to stop their hiking path without bigger weakness in the stock market, means the Fed put will not be the support that it used to be.  The Fed put strike price is much lower than current SPX levels. 

I believe we are topping out here much like in 2000 and 2007.  The initial sharp selloff in 2000 occurred in April, and then it was lights out in October.  In 2007, the initial sharp drop was in late February, followed by a big, scary dip in August 2007, and then it went down in earnest starting in November.  2018 had the big scary dip in February with retest in April, and now another big drop in October.  This feels more like August 2007 than October 2000, so there should be a sharp rally in November.  If not, the rally should only last 2-3 weeks and then go back down again.  Considering the seasonal tailwinds, I expect a 4-6 week rally towards at least 2870.

SPX 2000

SPX 2007

SPX 2018

Now that I am stuck in a pickle, buying the dip, I will try to wriggle my way out of this mess.  There is no way this gap up will be sustainable going into the middle of the US cash session, so I expect sellers to immediately bring down this gap up at 2684,as I am writing, when the US cash market opens.  There should be initial support at SPX 2660, and yesterday's lows at 2652.  I would wait till after Europe closes, during the US lunch hour to think about buying a dip.  If the SPX is below 2660 at that point, it could be a good dip buy looking for an oversold intraday reversal.  I hate to do it, but I will need to do some microtrading intraday to try to pick up some points from the bad long entries last week and earlier this week. 

There should be a decent intraday bounce coming up after this week is finished, as the stock buybacks will be back with a vengeance starting next week.