Today stocks traded decisively above the trend channel defining the October 2018 crash. Coincidentally, or not, today is the last day of this white knuckle month, a fitting place to put a period at the end of a ghastly slide. Readers can see this most easily by pulling up a one month chart of the world stock fund VT. I don’t need to draw lines for you; the channel is unmistakable, having only briefly been violated (to the downside) around the tenth of the month. Today’s trading range (OHLC bars) floats above it like a trial balloon. A Friday close above today’s close of 69.90 would confirm it as having passed the test.
Of course we’re not reading any long term significance into this development. We do however identify this as the end of the downdraft correctly forecasted on the Synthetic Systems chart dated October 1 (see Market Analysis, Synthetic Systems 2018.75). For the reasons we stated in our October 13 post The Crash of 2018, we continue to believe this event to have been a squall in an ongoing bear market. This particular leg down, however, we believe ended today.