Investor Alert: Charts Signal A Potential 43% Drop In The S&P

The S&P 500 may be setting up for a drop of 43% and the top may already be in. Just last week, Nvidia Corp. (NVDA) reported stellar earnings and guidance. The stock jumped 10% on the news. However, the S&P opened higher and sold off hard, ending the day sharply lower. This created a reversal engulfing candle on the daily chart. Reversal engulfing candles are extremely bearish.

In addition, there is a trend line that extends from the 2007 market top (before the Great Recession) to the 2021 stock market top. On the Nvidia earnings gap up, the S&P tagged that major trend line of resistance. This adds fuel to the fire of a potential top.

In terms of a target, simply connect the Great Recession lows to the Covid lows. That trend line signals the S&P could fall 43% in the coming 6-12 months.

While this may sound insane to investors, think about this. During the Great Recession the stock market dropped 58%. During the bear market of 2022, the stock market dropped 28%. If you take the average of that drop, it is exactly 43%. That 43% drop brings you right to the trend line from the Great Recession lows to the Covid lows.

Incredible.