Last night, I noticed that the current NDX chart looked very similar to the OEX in March – May 2001. A relatively steep sell off met a good double bottom that resulted in a strong advance. Both charts then rolled over.
The current NDX chart –
The OEX in 2001 –
The OEX in 2001 sank slowly and steadily into the Sept 11th induced panic bottom.
I didn’t think it was worth mentioning the similarities until this morning’s London terrorist attack. The troubling difference between the two charts is that in 2001, the market was already oversold and had been sinking for several months. Investor sentiment had already become negative before a panic bottom was put into place.
Currently, the market has just begun its decline and sentiment is still (before this morning) relatively optimistic. Again, I would be surprised if the equity markets don’t test their April bottoms. I remain cautious.