Comparing the 1995 Rally with Today
The late 1990s saw one of the most famous bull markets of all time. Are there comparisons between that historic moment and today?
Today’s idea attempts to answer that question with three indicators.
First is Wilder’s Relative Strength Index (RSI), which remained above 50 throughout almost the entire calendar year of 1995. Similar moments in history marked the beginning of longer-term rallies. Examples include May 1942-July 1943, July 1949-June 1950, October 1953-June 1954, April 1958-November 1958 and August 1982-June 1983.
Notice how the index’s RSI is now potentially behaving similarly.
Second is the 9-day Rate of Change oscillator, which has been mostly positive since early November. (That essentially means that investors buying a close on the index were mostly profitable two weeks later.) Notice how ROC stayed above 0 for almost all of 1995.
Third, SPX found support at its 21-day exponential moving average (EMA) in late 1994. It stayed above that EMA almost without interruption until the following August. This pattern, which may reflect a short-term uptrend, is reappearing today.
Apart from these technical considerations, some investors may find thematic similarities between 1995 and the present. For example, both have growth from new technology: Internet in 1995 and AI today. Both followed periods of gloom and interest-rates hikes.
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Important Information
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures or cryptocurrencies); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a futures commission merchant licensed with the Commodity Futures Trading Commission (“CFTC”). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association (“NFA”), and a number of exchanges. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services under federal and state money services business/money-transmitter and similar registrations and licenses.
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a member of NFA. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit [url = tradestation.com/DisclosureTSCompanies] TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
Today’s idea attempts to answer that question with three indicators.
First is Wilder’s Relative Strength Index (RSI), which remained above 50 throughout almost the entire calendar year of 1995. Similar moments in history marked the beginning of longer-term rallies. Examples include May 1942-July 1943, July 1949-June 1950, October 1953-June 1954, April 1958-November 1958 and August 1982-June 1983.
Notice how the index’s RSI is now potentially behaving similarly.
Second is the 9-day Rate of Change oscillator, which has been mostly positive since early November. (That essentially means that investors buying a close on the index were mostly profitable two weeks later.) Notice how ROC stayed above 0 for almost all of 1995.
Third, SPX found support at its 21-day exponential moving average (EMA) in late 1994. It stayed above that EMA almost without interruption until the following August. This pattern, which may reflect a short-term uptrend, is reappearing today.
Apart from these technical considerations, some investors may find thematic similarities between 1995 and the present. For example, both have growth from new technology: Internet in 1995 and AI today. Both followed periods of gloom and interest-rates hikes.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. See our Overview for more.
Important Information
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures or cryptocurrencies); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a futures commission merchant licensed with the Commodity Futures Trading Commission (“CFTC”). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association (“NFA”), and a number of exchanges. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services under federal and state money services business/money-transmitter and similar registrations and licenses.
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a member of NFA. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit [url = tradestation.com/DisclosureTSCompanies] TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
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