This is the 6th correction on S&P500 since 2009.

2022년 6월 8일

In today's post, we will compare the current correction in S&P500 with all the similar corrections that happened since the beginning of the bull market in 2009 (the bottom of the 2008 financial crisis).

Why are we doing this? Because in the market, no situation is completely new, and by understanding similar situations in the past, and the following resolutions, we can get a good idea of how to react to the present.

I will be using the following parameters. Every decline of 15% or more will be considered a major correction. Under those parameters, we have 6 situations to analyze.
2010 / 2011 / 2015 / 2018 / 2020 (I bet you remember that) / 2022 (now).



The information that you will see in the following pictures is:
a) % Decline
b) Duration from the beginning of the correction until the bottom of it.
c) The most external trendline of the corrections.

2010


2011


2015


2018


2020


2022


Alright. So how can I use this? You can use this in several ways. The most basic way is looking for patterns in specific areas you are interested in. For example, one of the main tools I use to look for setups is waiting for the breakout of the most external trendlines of corrections and then looking for corrective movements that I can use to set entry and stop levels. But that's my style. So you can use yours, like taking each of these scenarios and using moving averages, indicators, or whatever you prefer.

The key aspect here is that I have classified similar situations in terms of decline and Duration. Now it's up to you to develop setups around this, and you can test how your parameters would have worked on 5 scenarios in the past. If you see a clear edge, then you have a great opportunity to plan your next setup.

Thanks for reading! If you have ideas in mind, I would love to see what parameters you can come up with in the comments. Like "I have tested X, W, Z," and this was my result.