Bylov: Could Mega Double Tops Really Be True?

Jan Bylov, chief analyst at Nordea Markets, is a "rare specie" among analysts, as he is looking himself at all asset classes and uses inter-market approach in analyzing the markets. He writes today:

Equities – Could mega double tops really be true?
Reports true to technical analysis are increasingly focusing on the risk of mega double tops forming to be confirmed if stock markets maintain breaks below the post IT bubble lows back from 2002! Could this really be true as theory then would argue for a further 50% collapse? Well, in “unprecedented” times anything is possible – not least exposed by the post 1989 Japanese case, but forecasting such a global tsunami is hardly helping anyone as most prudent money managers already (hopefully) have reduced stock market exposure to minimum allowed according to their purposes. Now, I’m an optimist believing that our animal spirits will be re-ignited by global cheap money and enormous fiscal packages ultimately, but currently with bellwether stock indices challenging November lows I still cannot observe any new selling climaxes or other well-known signals advocating attractive odds for buying S&P500.

The market is breaking below recent weeks’ range low at 797. Now, the lack of clear upside dynamic (unusual large single-day price rise) or follow-through buying suggests that the sell interest remains intact opening a new attack at the secular important 2002/2008 trough at 739 – key to an additional 50% plunge in the months/years ahead (difficult to appreciate as realistic). Conversely, a dynamic rally (unusual large single-day price rise) above 840.20 appears a minimum to suggest a resurrection of buy interest towards 875.50 and the important early January high at 942.

Consider as a probability! Keep in mind the "invisible hand of government" ...