Technical Patterns 2008 = 2011…Repeat?

I just wanted to quickly follow up on the technical patterns that I touched on previously. With such uncertainly in the macro political/economic environment, it is interesting to take a magnified look at how closely the S&P 500 is mirroring itself from the first quarter of 2008. As you’ll notice in the two charts below, there are some glaring similarities. Whether or not we’ll repeat the same 2008 meltdown is uncertain, but it is clear from today’s trading that market professionals are clearly looking for direction. If there is significant disappoint out ofEurope, technical strategists will find it hard to ignore the parallels shown below.

See charts for a graphical analysis between 2008 and now.

As you’ll notice, there are some concerning parallels between the consolidation period of February-May 2008, and the trading environment we’ve seen over the last several months. Whether we see a similar crash, however, will likely largely depend on the macro-political/economic landscape and catalysts that should unfold in the coming months. Historically, double-bottoms do prove to be bullish technical indicators (as the bears are unable to convincingly move the markets to a lower range), so if there are positive developments on the horizon, we could easily see a breakout and a retest of 1,350 on the S&P 500. In the case of another “Lehman” moment, though, it is certainly possible we mirror the meltdown we saw in 2008. (Thanks to Alessio Rastani at LeadingTrader.com for pointing out this trend).

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