A few months ago, we found striking similarities between the 2015 S&P 500 chart and the 2011 and 2007 charts.
The 2011 analogy alerted us of a steep summer selloff followed by a choppy rally. Below is the 2011 comparison, first published on June 15:
![](http://www.ispyetf.com/app_files/PDNewsletter_Images/2011 SPX_2.png)
The 2007 analogy suggested a recovery to new highs.
The initial comparison between 2015 and 2011 is available here: S&P 500: 2011 vs 2015
The initial comparison between 2015 and 2007 is available here: S&P 500: 2007 vs 2015
The 2011 ‘script’ (that’s what we called it, because it was so accurate) projected a break or test of the August S&P panic low (1,867), followed by a rally.
The 2007 analogy suggested a rally to new all-time highs.
The September 20 Profit Radar Report analyzed and compared both prior pre-election years (2007 and 2011) to 2015 and came up with the following conclusion: “Regardless [of whether 2007 or 2011 plays out], the S&P should come back up to test 2,040 (and likely higher) before the year is over.”
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In other words, it doesn’t really matter - with or without new low - the S&P 500 will rally. That’s exactly what happened.
Below are updated 2015 vs 2011 and 2015 vs 2007 charts, along with a bonus chart that shows why a 2007-like topping pattern is becoming more likely.
![](http://www.ispyetf.com/app_files/PDNewsletter_Images/SPX 2007.png)
![](http://www.ispyetf.com/app_files/PDNewsletter_Images/SPX 2015.png)
Following the initial August panic low, the S&P 500 decided to follow a hybrid template, as performance took ‘pages taken’ from the 2007 and 2011 books.
What’s Next?
In 2007 and 2011 the S&P digested gains in November, which is in harmony with general pre-election year seasonality.
Perhaps more important (think about the elephant in the room) is the fact that buying power is drying up, as it did in 2007.
![](http://www.ispyetf.com/app_files/PDNewsletter_Images/2007 Secret Sauce.png)
The bonus chart above shows the subtle decline in buying power (as measured by my proprietary indicator called ‘secret sauce’ – click here for more details).
This kind of divergence, present now, also preceded the 2007, 2000 and 1987 market tops.
Based on buying power, a 2007-like outcome, where new highs are meet with a wave of selling, is becoming more likely.
For continued updates on what this bearish divergence means and out of the box S&P 500, gold and silver anaylsis, join the Profit Radar Report.
Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013 and 17.59% in 2014.
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![](http://www.ispyetf.com/app_files/PDNewsletter_Images/TR1_4.png)
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