Market Patterns May Reveal 2008 Crisis Repeat

2020-03-30 | Simpler Trading Team

Key sector tickers revealed a squeeze fest early Monday as indexes launched the week with an uptick following the Friday tumble.

Despite a Friday selloff, another historical marker was set last week as the Dow surged to its best week in more than 80 years.

The market flury to start things this week revealed multiple squeezes in high-profile stocks like AMZN and NFLX with bullish patterns. Simpler Trading moderators profiled trade setups of call debit spreads, long money calls, and the lower-risk butterfly often used for gains.

Online trading rooms at Simpler showed the highest level of member trader participation in the history of the company. Activity mirrored the heightened interest of traders seeking insightful input into the status of the market and possible opportunities.

Market signals were bullish with an air of caution.

The VIX eased off its pressure bubble while markets appear to be responding to positive news about possible coronavirus treatment and continued efforts to contain the virus’ spread.

The caution is that a market tumble repeat may be the next step in history.

Buy signals were strong into the final hour Monday, and the caution is how long will bullish efforts last. Market crisis history has proven steep declines start suddenly which leaves traders nervous to the long side.

The up and down news cycle may take second stage to a market pattern resembling 2008. During that meltdown the markets faced 50% retracements to the upside before moving lower again.

Economic indicators, such as oil losing money and upcoming earnings reports, could cause rips to the downside. Cautious traders are wary the market may crater again and push through the March lows.

We Saw: the pushing to continue last week’s rally — 

  • Positive market response to coronavirus treatments
  • A bullish push to keep market in an upswing
  • Dow leading the way with an almost 700-point gain

We’re Watching: … if history repeats 2008 patterns —

  • Retracement may be short reprieve before tumble
  • Squeezes identified in key sector tickers
  • Market reaction to economic indicators, i.e. oil and earnings

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