"We Saw Similar Setups In 2000 & 2007" – Chartist Warns Of "Deeper Selloff"

While Friday’s panic-bid scramble back up to the optically-pleasing moving-averages has prompted some hope that the worst is behind US markets, this week’s plunge, crashing through several key technical levels, has prompted Craig Johnson, chief market technician at Piper Jaffray, to issue an ominous warning.

‘As if by magic’ the machines lifted stocks to their critical moving-average support/resistance levels…

But that hasn’t “fixed” the technical break…

“We’ve broken back below these January lows. That’s a little bit more of an ominous signal from the chart perspective,” said Johnson on CNBC’s “Trading Nation” this week.

2018…

“We saw similar set-ups to that in 2000 and also in 2007,” two of the largest and most recent prolonged sell-offs.

2007…

2000…

As CNBC’s Keris Lahiff notes, there’s no shortage of catalysts that could take the S&P 500 down to those levels, said Johnson.

“When you start looking around the world and you start looking at the big breakdown in the DAX, and the Shanghai composite and what’s going on in the bond market and financials sectors not participating in this advance, there’s more problems out there that we need to pay attention to,” said Johnson.

“I think we’re going to see a deeper sell-off.”

Stacey Gilbert, market strategist at Susquehanna, shared her strategy to protect against any further stock market damage with “Trading Nation” on Thursday. She recommends owning a protective out-of-the-money put and selling an upside call against that to finance the protection.

“It’s going to give me the downside exposure that I want, ideally the rest of my portfolio has some outperformance that that short upside call that I have isn’t going to be as significant to the rest of my portfolio,” Gilbert said.

But, as StockBoardAsset’s Alastair Williamson notes, in a series of ominous-er and ominous-er tweets,

Is this true? pic.twitter.com/rJvtqK7KBb
— Alastair Williamson (@StockBoardAsset) October 11, 2018

50-yr Dow Jones trend line warning?? pic.twitter.com/BetqMLkxGX
— Alastair Williamson (@StockBoardAsset) October 12, 2018

wow pic.twitter.com/YVCNrJZeGG
— Alastair Williamson (@StockBoardAsset) October 12, 2018

Dow Jones pic.twitter.com/qq2R11Gez0
— Alastair Williamson (@StockBoardAsset) October 12, 2018

Source: Zero Hedge