S&P 500 Index: Is a crash coming? Stretched indicator implies 600-point plunge (or more)

Current levels exceed those seen weeks before major market declines such as the 2008 crisis.
The odds of remaining at these levels for a long time are extremely low.
A crash of over 600 points in the S&P 500 Index is on the cards.

Tomas Salles FXStreet

American stock indices are trading at record levels and persistently beating hitting new all-time highs. Euphoria levels are skyrocketing, and everyone is celebrating the effectiveness of the policies implemented by President Donald Trump.

Indicators in the weekly range of the S&P500 are reaching extreme levels suggesting that a sharp correction in the U.S. market may be near.

The MACD on the weekly chart is reaching levels not seen since the S&P500 launched in 1957.
Also, the Standard Deviation Indicator in the ultra long term configuration – 200 weekly periods – hit 319 points.

In May 2015, shortly before the S&P500 fell 337 points (-15.73%) the standard deviation indicator marked 300 points.
In September 2018, shortly before the S&P500 fell 598 points (-20.33%), the standard deviation indicator marked 300 points.

Author

Tomas Salles

FXStreet

Tomàs Sallés was born in Barcelona in 1972, he is a certified technical analyst after having completing specialized courses in Spain and Switzerland.

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