2024 SPX Thought Experiment

14 déc. 2023

In my previous post on SPY, I presented the argument for a potential 30-35% market crash in 2024, following new all-time highs.

This updated chart incorporates worst-case scenarios and draws parallels with the DOT Com bear market of 2000-2003.

> Utilizing the year 2000 as an analogy for comparing market cycles. This provides valuable insights into similarities and differences in behavior.

> While each market cycle is inherently unique, the adage holds: history doesn't repeat itself, but it often rhymes.

Outlined Scenarios:

• Scenario 1: Anticipating a 35% decline to 3200. This projection is grounded in the analysis of dark pool positioning and technical patterns, with support identified around the 2019 highs.
  
  Scenario 2: Contemplating a market crash mirroring the severity of the 2007-2009 Great Financial Crisis, featuring a potential 57% decline. Such an event could be triggered by a credit event, with precursors observed in 2023, including the failure of some prominent banks.
  
  Scenario 3: Pondering a drastic market meltdown akin to 1929, with a conservative estimate of a 70% decline. This scenario would involve a significant credit event and possibly multiple unforeseen shocks, such as global conflict (WW3), loss of USD reserve status, or other speculative events (BLACK SWANS).

While Option 3 appears highly unlikely, recent years have seen several unprecedented events, reminding us to stay vigilant as traders. Monitoring price actions and adjusting strategies accordingly is crucial. Always prioritize risk management to safeguard your positions in the ever-evolving market landscape.