The Ghost of 1986-1987 Stock Market Overlay onto $IWM

The 1986-1987 stock market advance was 48% as measured by the S&P500 Index SPX from the low in late 1986 which peaked in August 1987 and crashed into October 19th's spectacular 20% decline in one day.

The advance in the Russell 2000 Index from the low in 2023 to the high in 2024 was 51%, topping the 48% gain in the SPX and the meltdown wasn't as spectacular, but it was similar.

There were similar patterns in fears of trade wars, US dollar declines, new tax laws going into effect back then and tax laws sunsetting this time. Those you can go into by reviewing my other charts I have published over the years here.

I stretched the 1987 pattern to fit the low to the high, so it isn't "exactly" the same time day-to-day for this pattern.

I found it interesting because the chart of IWM all by itself had the same "look" to me as the 1987 bull market and crash so I decided to put it together for you all here to see.

I would expect a choppy market from here on as people adjust to the new uncertainties. Sellers of this decline will be shy to reinvest anytime soon and buyers are likely afraid to step up and get aggressive with so much uncertainty.

Sentiment as measured by AAII shows an extremely fearful and reluctant investor class, which is typical to see at major market bottoms.

Wishing everyone peace and prosperity!


Tim West
11:17AM EST April 24, 2025