March 2020 Market Forecast Updated

Here's the latest chart of the Chart Pattern Indicator (what I call the CPI). Vertical red lines show bearish signals. Green vertical lines are bullish signals. As the chart shows, the indicator signaled a sell close to the peak (actually about 2 days after the peak, regardless of what the chart shows). It was a timely signal even if it was a day or two late. Bearish divergence between the indicator and the index occurred a week or two before the peak. That was a nice sell indicator, too. Bearish divergence happens when peaks in the indicator diverged from the index. I show that divergence with two blue lines. The CPI line slopes downward and the index line slopes upward. Bearish divergence means the index will likely follow the indicator (down in this case).

On February 25, I didn't believe the Dow would drop to 26,446 as the red line predicted. And yet it did, bottoming at A, exactly on time. But then the index kept on going down (after a slight pause). As aggressive as the forecast was, it was too conservative because the Dow just blew through the prediction. The next chart shows the Nasdaq

This chart shows the forecasted Nasdaq peaking now. Instead, the index craters. Imagine if the red line were to be flipped upside down. Then the prediction would be a lot closer to reality. Notice where the forecast ends the year. It's well below the start. The next chart discusses the S&P 500 index.

The S&P 500 index dropped below the forecast, too. It should have been rising for a week or so by now. Notice that the end of the year is about where it began. If that holds true, we have a nice recovery due by year end.